Semi-retirement — working reduced hours while beginning to draw income from super — is an increasingly popular choice for Australians in their late 50s and 60s. Rather than making an abrupt stop-work decision, semi-retirement allows a gradual transition that can benefit both financial outcomes and lifestyle satisfaction.
What Is Semi-Retirement in Australia?
Semi-retirement means working part-time (or casually, or in a reduced capacity) while supplementing your reduced employment income with income from super or personal investments. The goal is to maintain an acceptable lifestyle while extending the life of your retirement savings and potentially improving Age Pension entitlement over time.
How Super Works in Semi-Retirement
Your access to super in semi-retirement depends on your age and employment status:
| Age | Work status | Super access |
|---|---|---|
| Under 60 | Working (any hours) | No access (must meet preservation age) |
| 60–64 | Permanently retired from an employer | Can access super (condition of release: retirement) |
| 60–64 | Still working (even part-time) | Transition to Retirement income stream only (up to 10% of balance/year) |
| 65+ | Any work status | Full unrestricted access |
Transition to Retirement (TTR) and Semi-Retirement
The Transition to Retirement (TTR) strategy is specifically designed for the semi-retirement phase. Between ages 60 and 64, you can open a TTR income stream while still working:
- Draw up to 10% of your TTR pension balance per year
- Fund reduced working hours by replacing some salary with TTR income
- Tax-free income from TTR if age 60+
However, TTR accounts do not have the 0% earnings tax benefit that full pension phase accounts do — earnings inside a TTR account are still taxed at 15%.
See Transition to Retirement Strategy Australia for a full explanation.
Fully Retired at 65 — Part-Time Work While Drawing Super
After age 65, you have unrestricted access to super regardless of your work status. This means you can:
- Retire from your main career at 65
- Continue casual or part-time work in a different role
- Draw from your account-based pension to supplement part-time income
At this stage, work income and pension drawdowns are both tax-free (age 60+), and there is no conflict between work and super access.
Semi-Retirement and the Age Pension
The Age Pension becomes available at 67. If you are working part-time at 67, your employment income will be assessed under the income test:
- Single Age Pension maximum (2025): ~$1,144/fortnight
- Income test free area (single): $212/fortnight (below this, full pension)
- Taper: pension reduces by 50 cents per dollar of income above the free area
Example: If you earn $600/fortnight from part-time work, you are $388 above the free area. The pension reduces by $194/fortnight. You still receive a significant partial pension.
If your part-time work is moderate — say 1–2 days per week earning $20,000–$30,000/year — you will likely still receive a meaningful partial Age Pension at 67.
The Work Bonus
The Work Bonus allows eligible Age Pension recipients (age 67+) to earn up to $300/fortnight from employment without it counting towards the income test. This effectively means up to $7,800/year in employment income is exempt from the pension income test — making part-time work very compatible with the Age Pension.
Financial Benefits of Semi-Retirement
| Benefit | How it helps |
|---|---|
| Extends super longevity | Lower drawdown from super during semi-retired years — more super to fund full retirement |
| Maintains human capital | Continuing to earn preserves some income without fully depleting savings |
| Softer investment sequence risk | Partial income from work reduces the need to sell investments during potential market downturns |
| Delayed full Age Pension drawdown | Less pressure on super in 60s; more is available when Age Pension eventually supplements at 67 |
Lifestyle Benefits
Beyond the financials, semi-retirement offers:
- Social connection: Work provides routine, purpose, and social interaction
- Gradual adjustment: Avoids the identity disruption that sudden full retirement can cause
- Maintained cognitive engagement: Particularly valued by professionals and knowledge workers
Planning for Semi-Retirement
Key steps for planning a semi-retirement transition:
- Determine when you can access super (preservation age: 60 for most)
- Model your income needs from part-time work + super drawdown + future Age Pension
- Discuss with your employer — many are open to flexible arrangements for experienced employees
- Check your super balance against the drawdown required in the semi-retirement years
- Seek financial advice — a TTR or pension strategy requires careful structuring
Related Articles
- Transition to Retirement Strategy Australia
- Account-Based Pension Australia
- Age Pension and Super Strategy Australia
- Income Test Age Pension Australia
- Retirement Planning Australia
- Retirement Investing hub
Frequently Asked Questions
Can I work part-time and receive the Age Pension in Australia? Yes. Working part-time and receiving a part Age Pension is common in Australia. Your part-time employment income is assessed under the income test, and your pension is reduced by 50 cents for each dollar of income above the income-free threshold ($212/fortnight for singles). The Work Bonus allows up to $300/fortnight of employment income to be excluded from this assessment.
Can I access my super while still working in Australia? After age 65, yes — no restrictions. Between age 60 and 64, only if you have permanently retired from an employer or commenced a Transition to Retirement income stream (which allows up to 10% drawdown while still working).
Is semi-retirement better financially than full early retirement? Typically yes — working even 2 days/week earning $20,000–$30,000/year meaningfully reduces super drawdown in your 60s, leaving more to grow for full retirement and eventually complement the Age Pension. The financial benefit often outweighs the tax cost of earning that additional income.
This article provides general financial information only. For advice tailored to your situation, speak with a licensed financial adviser through the ASIC financial advisers register or MoneySmart.