Australia · Worked example
Retire at 65: Funding the Gap Before an Age Pension Estimate
Starting retirement at 65 and entering a pension from 67 creates a two-year gap. The first-year budget must come from money already available, even when later pension payments improve the longer-term projection.
Assumptions you can reproduce
Start retirement now at age 67 with A$500,000 in super and plan to age 95. Salary and additional contributions are zero because there is no accumulation period. The illustrative annual return is 6% after investment earnings tax but before a 0.5% percentage fee and A$100 annual fixed fees. Inflation is 2.5%. Age Pension is A$0 unless a scenario explicitly changes it.
All retirement amounts are in today's Australian dollars and before personal income tax. The model keeps the entered earnings-tax-adjusted return throughout retirement. It does not switch automatically to a tax-exempt pension account or apply mandatory minimum drawdowns. The separate target-income projection starts at A$45,000 a year; it is not the level budget calculated below.
Change the start to 65 and enter a hypothetical pension
For this comparison, set both current age and retirement age to 65 and keep the horizon at 95. Compare no Age Pension with an invented A$12,000 annual amount beginning at 67. This amount is not a published maximum, a personal entitlement or an estimate produced by this website.
| Entered Age Pension | Pension paid in first year | Annual budget | Balance after first year |
|---|---|---|---|
| A$0 a year from 67 | A$0 | A$24,745 | A$489,315 |
| A$12,000 a year from 67 | A$0 | A$35,587 | A$478,329 |
In the pension scenario, about A$35,587 of first-year spending is funded by super withdrawals. There are no pension payments during that year. A later income stream can support a higher lifetime budget, but the model only accepts a budget if every earlier month's withdrawal is also fundable.
An accessible balance matters
The model does not confirm whether you can access a particular super account. A balance on a statement and cash available on your retirement date are different inputs to a real plan. Confirm access and the proposed payment arrangement with your fund before treating this as a spendable balance.
Age Pension can change
Services Australia determines entitlement using its current requirements, including age, residence, income and assets. The calculator keeps your entered pension constant in today's dollars after its start age. It does not reassess the payment as assets fall or household circumstances change.
Run the zero-pension comparison alongside any forecast. For an isolated two-year bridge, A$3,000 per month totals A$72,000 before returns, fees, tax and inflation. That arithmetic does not cover the rest of retirement.
A longer gap, a smaller payment, or no pension
These comparisons all start at 65 with A$500,000, finish at 95, and receive no pension during the first twelve months. The age-68 entry is a hypothetical receipt date, not a change to the statutory eligibility age.
| Scenario | Start → end age | First-year annual budget | First-year monthly budget | Try the figures |
|---|---|---|---|---|
| A$12,000 from 67 | 65 → 95 | A$35,587 | A$2,966 | Try: A$12,000 from 67 |
| A$12,000 from 68 | 65 → 95 | A$35,032 | A$2,919 | Try: A$12,000 from 68 |
| A$6,000 from 67 | 65 → 95 | A$30,166 | A$2,514 | Try: A$6,000 from 67 |
| No Age Pension | 65 → 95 | A$24,745 | A$2,062 | Try: No Age Pension |
A later or smaller payment reduces the budget the pot can fund in this model. No row forecasts means-test outcomes as assets change. For a comparison with retirement at 67, use the equal-balance retirement-age table.
What this example cannot tell you
Returns arrive smoothly every month in this model. Real markets can fall early in retirement, and the order of returns matters when money is being withdrawn. The calculation does not estimate a probability of success. A budget that exhausts capital near the chosen end age leaves no modelled reserve for living longer, large repairs, care costs or an inheritance.
Try a lower return, higher costs and a longer horizon. Check pension access with your provider and compare essential expenses with reliable income. These are invented educational scenarios, not recommended spending levels or personal financial advice.
This link loads only the invented example above. Your own entries are never added to the link. Figures in the article are rounded to whole currency units; the model calculates with unrounded values.
Sources and review record
The official pages below were checked on for the specific statements described. The numerical scenarios are our calculations, not government forecasts. No independent financial or native-language reviewer has approved this material.
- ASIC Moneysmart: types of retirement income — distinguishes super, government benefits and other retirement income.
- ASIC Moneysmart: choosing a super fund — compare percentage and fixed costs alongside investment performance, insurance and services.
- Services Australia: Age Pension — check current eligibility and payment information separately.
Full methodology · Twelve-month budget method · Update log · Independent review brief · Report a correction