When is the best time of the year to retire?

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There are many factors to consider when deciding when to retire. Some people do not have a choice, finding themselves out of work before they reach retirement age, where others plan to retire on the day they become eligible for the Age Pension.

After working for most of your adult life, no-one will begrudge you taking the retirement option at the first possible opportunity. However, there is actually a perfect time to retire, and it all concerns when you take your leave entitlements.

One of the first decisions you will have to make as you approach your retirement is what to do about your leave entitlements from your employer. Do you want them paid out in a lump sum or would you prefer to take your leave before you retire?

The best thing to do in this situation is to take your leave prior to retirement. There are two reasons for this.

Firstly, if you have a considerable amount of leave accrued with your employer, you can continue to earn extra leave while you are taking your break.

Secondly, your employer continues to pay superannuation into your account while you are taking whatever leave entitlement you are owed.

However, if you would prefer to take your leave entitlements in one lump sum, you have to think about timing your retirement to suit.

The reason is the taxman.

If you retire before the end of the financial year, your lump sum leave entitlements will be added to your earnings and could potentially lift you into a different tax bracket. This could result in you owing the Australian Taxation Office money when you complete your tax return.

The alternative is to retire early in the financial year and try and keep your earnings down so that your leave entitlements attract the lower tax rate, making a big difference to the way you start your retirement.

What considerations do you think people need to consider most when they are retiring?

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Written by Ben


Total Comments: 21
  1. 0

    The time to retire is when you are fed up with your job and having enough money in super
    to get you to 65 years of age. That said you will also have your own place to live, otherwise
    retire when you cannot work any longer. Younger people have to consider 67 years of age
    since the changes were brought in by the previous Rudd Govt.

    • 0

      “fed up with the job”… includes unable to do it because of physical demands. I know someone who is 57 and has had 2 bad back episodes due lifting and twisting. The days are long, some are 10 hours or more and in QLD temps of 40C. No light duty jobs around so ‘early retirement’ is available, but ‘age pension’ is still 10 years away.

    • 0

      Aviatorman, in such a case if you don’t qualify for a disability support pension but had to leave your job for health reasons, you might receive Newstart*(apparently it is also less than Unemployment Benefits) and be expected to look for another job. In such cases the system “stinks”.

  2. 0

    Retirement is not a set of numbers; it’s a state of mind. I have a friend who worked well into his eighties because he said that he got bored away from work. I retired before 65 because I was ready to get on with the rest of my life. Which one of us was right? I would suggest both of us. The timing has some importance but is not the most important thing to consider.

  3. 0

    It depends on the individual and his or her circumstances.Practically SPEAKING you are ready when you have a fully paid roof over your head enough in savings and debt free. Some people may need to retire early due to health issues or the need to take care of loved ones .Some are happy to work part time because being occupied keeps them occupied.There is no magical age of retireiment

  4. 0

    Apparently never according to coalition governments.

    • 0

      Hey Mick – all Govts. Was not the coalition making us work 2 years longer. Just get off rooting for Labor all the time. They are all in it.

  5. 0

    Not before August 20th, this allows time for the annual dividend % to be declared on your superannuation ,If you retire after June 30 and before declaration your final dividend will only be paid at a deemed rate which may be far less than the eventual declaration… when I retired in August 1997 it benefited my final payment by-an extra 14%

  6. 0

    Yes Mick our Pollies march to a different drum, stuff you Jack I am okay.

  7. 0

    Retirement is so much fun I now wish I had retired a lot earlier than I did. Just love the fact my time is mine now to do with as I please.

  8. 0

    Oh to be able to even MAKE that choice! Would love to have that option, but was robbed of that since being booted out of a contract job for a younger model (Govt job – niece of the supervisor).

  9. 0

    Thanks JustGus – don’t even know if that’s the dividend date for my super but I will find out. I also need to take into account my annual increment date as I am in a defined contribution/benefit fund which calculates final payout on average of last three years of annual salary.

  10. 0

    Retired 20 years ago when I was 50.
    NO regrets at all.
    Best thing I could have done.

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