Finance expert reveals seven simple tips to help you retire early
Many people dream of retiring early, but cost-of-living pressures are delaying plans to sip cocktails on the beach for millions of Australians.
According to the latest data from the Australian Bureau of Statistics, 156,000 people aged 45 and over retired in 2024-25, with the average age being 63.8 years.
There are currently a total of 4.5 million retirees aged 45 and over in Australia, and the average retirement age of all retirees is 57.3 years.
The average age at which people aged 45 and over plan to retire is 65.6, a slight increase from 65.4 in 2022-23.
Super Guy founder and CEO Chris Strano says there are seven simple tips people can follow to help them achieve their early retirement dreams.
1. Invest with purpose
People need to figure out what return on investment they need to meet their spending goals, Mr. Strano says.
“Realistically, you should be looking at an average long-term annual return of somewhere between four percent and 10 percent, depending on your comfort level with risk. Anything less is too conservative, and anything more is unrealistic and unsustainable,” he said.
“Once you determine the required level of return and your comfort level along with the risk involved, you are now investing with a purpose.”
2. Create a passive income stream
For every $1,000 you invest, you create a passive income stream of $50 per year, growing with inflation for the rest of your life.
“Now, $50 doesn’t seem like a lot, but think about how many times you can put $1,000 away in your lifetime,” Mr. Strano said.
“Australia has approximately 250 working days per year. If you invest $6000, you now only need to work 249 days to earn the equivalent amount based on a $75,000 annual wage.
“Invest another $6,000 and you’re down to 248 business days, which assumes you’re living off the income from your investment alone.
“If you’re happy to use the capital as well and leave nothing behind, then you probably only need two-thirds of that.”
If you think saving $6,000 a year is difficult, Mr. Strano says it’s simple.
“Stop buying stupid things. Or keep buying stupid things but downsize your home,” he said.
3. Downsize your home
No matter the size of your home or the neighborhood you live in, there will always be somewhere you can buy cheaper if you’re willing.
“Your home is a lifestyle asset – a creature comfort – it does not provide you with an income and does not assist with your intention to retire early,” Mr. Strano said.
“Downsizing your home can free up a few hundred thousand (dollars) that you can invest and generate investment income to cover your retirement expenses — or at least shave off another 20-30 work days per year.”
4. Invest for retirement
Mr. Strano says the real benefit of making additional contributions to your retirement is that you’re investing in a tax-efficient environment.
The tax on super winnings is less, meaning your wealth can accumulate more quickly.
“The downside is that you can’t access your pension until you’re 60,” Mr. Strano said.
“So, does making extra super contributions allow you to retire early? I guess it depends on your definition of early.”
“Some people consider 67 to be the retirement age in Australia, while others consider 65, so I guess 60 might be classed as an early age for some people.”
5. Stop spending on “stuff”
Before making a purchase, people should ask themselves whether they need it or just want it.
“Every time you buy something, you not only reduce the amount you can save and invest, you also unconsciously increase your standard of living,” Mr. Strano warns.
“Think of how many unnecessary things you buy or how many times you upgrade a car, phone, watch, or outfit just because it’s $20 or $50 or on sale.
“What you’re really saying is that you value these bargains and objects as time goes by. The only way to pay for them is to work more and retire later.”
“By increasing your standard of living, you are effectively delaying your retirement because the amount of non-work-related income you will need each year to meet your increasing standard of living becomes increasingly larger.
“Once your standard of living goes up, it’s very hard to go back.”
6. Turn 60
To retire early, you need investments that will cover your expenses from the time you decide to retire until you turn 60.
You will then be able to access your pension and possibly your age pension.
“Your first step is to estimate what your super balance is expected to be at age 60,” Mr. Strano said.
“Then calculate how much income this, together with Centrelink age pension payments, will give you over retirement.
“If it’s enough, you’re halfway there. If not, contribute as much as needed for retirement until the projected balance at age 60 is sufficient.”
“The next step is to build enough wealth outside of retirement to cover expenses between now and age 60… you need to focus on investing your excess income to a point that will get you to age 60.”
“The less you spend on things, the more you save and the faster you reach retirement.”
7. Retire abroad
The cost of living in places like the Philippines, Thailand, Indonesia and Vietnam is much lower than the cost of living in Australia.
“By moving to Southeast Asia, you should be able to retire sooner because you need less money to provide your retirement income level and cover expenses,” Mr. Strano said.
“Even better, these countries are all located close to Australia, meaning you can attend weddings, funerals and the grand final.”
