When is the best time of the year to retire?

Many retire as soon as they hit retirement age, but is there a better way?

How to time your retirement

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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    COMMENTS

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    Cowboy Jim
    1st Feb 2018
    11:34am
    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.
    Aviatorman
    1st Feb 2018
    12:37pm
    "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.
    Blossom
    8th Feb 2018
    8:16pm
    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".
    Old Man
    1st Feb 2018
    12:11pm
    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.
    KB
    1st Feb 2018
    12:35pm
    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
    MICK
    1st Feb 2018
    12:35pm
    Apparently never according to coalition governments.
    Cowboy Jim
    1st Feb 2018
    5:37pm
    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.
    JustGus
    1st Feb 2018
    12:54pm
    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%
    VeryCaringBigBear
    1st Feb 2018
    3:25pm
    As long as the return is positive not negative.
    Cowboy Jim
    1st Feb 2018
    5:40pm
    Good way of doing it. Did just the same in 2006 but then the GFC got me big time. Got over that one but a lot of plans were just coming to fruition.
    floss
    1st Feb 2018
    2:07pm
    Yes Mick our Pollies march to a different drum, stuff you Jack I am okay.
    Old Man
    1st Feb 2018
    2:35pm
    I agree floss, ALL politicians, not just one side. Their only goal is re-election to keep their snout deep in the trough.
    VeryCaringBigBear
    1st Feb 2018
    3:18pm
    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.
    Cowboy Jim
    1st Feb 2018
    5:41pm
    Never a truer word ever written, BigBear. We are so clever in hind sight.
    Pass the Ductape
    1st Feb 2018
    6:08pm
    I'm with you two!
    Radish
    1st Feb 2018
    8:26pm
    If I had my time over I would not have retired at 46.
    sunnyOz
    1st Feb 2018
    4:27pm
    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).
    Cowboy Jim
    1st Feb 2018
    5:43pm
    Thought that was nepotism and not allowed any longer.
    Lizzy
    1st Feb 2018
    8:42pm
    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.
    dontwantwun
    1st Feb 2018
    10:41pm
    Retired 20 years ago when I was 50.
    NO regrets at all.
    Best thing I could have done.
    Blossom
    8th Feb 2018
    8:22pm
    If you are made redundant you don't have a chance of taking leave before your job is terminated. In my case, as was the case with other staff at the same company, there was no indication that any were going to be retrenched at all. We were retrenched on the 15th June.
    Fortunately the extra pay entitlement was taxed at a slightly lower rate. For health reasons I didn't succeed in getting another job so took a allowance from my Super.


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