How Much Money Do You Need to Retire Before 60 in Australia? (The Bridge Portfolio Strategy)

Retiring early is the ultimate dream for many Australians. However, there is one major hurdle standing between you and a retirement at 50 or 55: The Preservation Age.

In Australia, you generally cannot access your Superannuation until you turn 60. This creates a "funding gap" for anyone hoping to leave the workforce early.

In this guide, we break down the two-phase approach to early retirement and explain exactly how to calculate the number you need to bridge the gap between your desired retirement age and age 60.

The Two-Phase Retirement Strategy

When planning for early retirement in Australia, you need to stop thinking about your life as one big block and start viewing it in two distinct phases.

Phase 1: Life After 60 (The Super Phase)

This phase is usually the easiest to solve. Once you reach 60 and retire, you can access your Superannuation. If your balance is within the Transfer Balance Cap (currently $2 million for FY26), you can convert your accumulation account into an Account-Based Pension.

Why Super is king for Phase 1:

• You receive a regular, tax-free income.
• Investment earnings inside the account are tax-free.
• It does the "heavy lifting" for the majority of your retirement.

Even if you retire early, you must continue to optimize your Super so it is ready to take over your expenses the moment you turn 60.

Phase 2: The Early Years (The "Bridge" Phase)

This covers the years between your early retirement date (e.g., 55) and age 60. Since your Super is locked away, you need assets outside of Super to fund your lifestyle.

While you could use investment property, a portfolio of shares and ETFs is often superior for this purpose because:

• It is liquid and flexible.
• It is diversified.
• You can control exactly how much you draw down and when.

We call this the "Bridge Portfolio."

Step-by-Step: Calculating Your "Bridge Number"

How much do you actually need in your Bridge Portfolio? Let’s look at a realistic case study.

Step 1: Define the Income Goal

Frank wants a passive income of $6,000 per month (in today’s dollars). However, due to inflation (assumed at 3% p.a.), $6,000 today won't buy the same lifestyle in 17 years. By the time Frank turns 55, he will actually need $9,917 per month to maintain his purchasing power.

Frank plans to keep his Bridge Portfolio invested (assuming a 6% return) and draw down on the capital. The goal is for the account to hit $0 exactly when he turns 60, at which point his Super takes over.

Base Requirement: To fund this monthly income for 5 years, Frank needs $530,457 by age 55.

Step 2: Add Specific Lifestyle Goals

Frank doesn't just want to survive; he wants to live. He adds a few one-off expenses (adjusted for inflation):

• Age 55: A $15,000 celebration holiday.
• Age 58: $10,000 to help his son with a gap year.
• The Buffer: He wants $50,000 remaining in the account at age 60, just in case, rather than running it down to zero.

The Final "Bridge Number"

When you combine the monthly income + one-off goals + the safety buffer, Frank’s total target number is:

$640,874

(This is the amount required in his personal name by age 55).

How to Build the Bridge Portfolio

Now that Frank has a target ($640,874) and a timeframe (17 years), how much does he need to invest right now?

Using a detailed investment calculator that factors in capital growth, income returns, franking credits, and tax rates, we can work backward to find the monthly contribution required.

The Assumptions:

• Starting Balance: $20,000
• Capital Return: 4% p.a.
• Income Return: 4% p.a. (with 30% franking level)
• Tax Rate: 39% (during the accumulation phase)
• Contribution Increase: He will increase his contributions by 3% each year to match inflation.

The Result: To hit his goal of retiring at 55, Frank needs to invest:

$1,311 per month (Totaling approx. $15,727 in the first year).

By sticking to this plan, the power of compound interest accelerates his portfolio growth. While the first $200k might feel slow to accumulate, the growth speeds up significantly as he approaches his target date.

Summary: Your Early Retirement Checklist

If you want to replicate Frank's success, follow this simple framework:

1. Separate your timeline: Calculate what you need for Life Post-60 (Super) vs. Life Pre-60 (Bridge).
2. Calculate your gap expenses: Adjust your desired monthly income for inflation.
3. Choose your strategy: Will you live off dividends only, or draw down the capital? (Drawing down capital requires a much smaller portfolio).
4. Factor in "lumpy" costs: Don't forget new cars, holidays, or home repairs.
5. Start investing: Use a calculator to determine the monthly investment required to hit your Bridge Number.