What to consider when thinking of retirement

Before we get into the what and the how of planning for your retirement, I want to introduce a different idea to you, a way of thinking about your future retirement that you may not have done before.

While retirement is the end of your working life, it's also the beginning of the next stage of your life.

According to the Australian Bureau of Statistics (ABS), in the 2022-23 financial year, there were 4.2 million people over the age of 45 who were retired: 2.3 million of them women and 1.9 million of them men.

The average age at retirement (for all retirees) was 56.9, however, the average age people intend to retire is 65.4 years, with both of these ages trending upwards over time.

Retirement is coming later in life for more Australians every year. Image source: Drazen Zigic / Freepik

In my experience working in this space every day, a ‘young’ retirement these days is around 60. Lots of people in their 40s and 50s I speak to talk about working until around 65, but I feel more people retire under 65 than over 65.

You’ll probably spend more time in retirement than you think. Then, when you look at longevity, according to the ABS, a 60-year-old male is likely to live another 24 years while a female is likely to live another 27.

Goodbye routine, hello free time

During your working years, your life is governed by the routine of working life: Get up, sort out the kids, get them to school, get to work, work the day, home, dinner, clean-up, sleep, repeat.

But what happens when you stop working? What happens when the routine you’ve been so used to for all those years stops? What will give you purpose and belonging? What will make you feel fulfilled? What will be the break (that holidays once were) from endless leisure time?

While the idea of not having to be anywhere at any particular time, no one expecting anything of you, and every day being a Sunday, you really do need something to do.

In my job as a financial adviser, I’ve seen some people navigate this really well and others really struggle.

The big retirement dreams

So, what do people typically do once they retire? Some popular goals are:

• overseas travel

• domestic travel

• home renovations and repairs

• spending time with grandkids

• community engagement/volunteering

Without a doubt, a long overseas holiday is at the very top of just about every retiree’s wish list and, in my experience, it’s rarely a one-off aspiration. People want to travel overseas annually for the first ten or so years of their retirement.

For some people, they may have already started doing regular overseas holidays during their working lives.

If the kids have grown up and left home or are working themselves, the mortgage has been paid off, and super balances are looking healthy, I’m all for encouraging people to start travelling before they finish work. It’s a whole lot easier to pay for when you have an income coming in.

With the mortgage paid and kids grown, many retirees go on holiday. Image source: Freepik

In many cases, I encourage them to go business class, because, why not? What does it cost?

For a couple, I say you’ll be lucky to get change out of $30,000 for a four- or five-week overseas trip. Then, it depends if you are flying business or economy, what room you take on the cruise ship, if you’re staying in an Airbnb or 5-star hotels and on it goes…

What about the day-to-day?

Now I want you to think a little deeper about what you are going to do in retirement. Think past the overseas holiday and those household jobs that you haven’t found the time for. Those things will come and go very quickly.

What may surprise you is that a number of people find themselves going back to work. Particularly if they retired younger.

The reasons vary as to why people find themselves going back to work, but can include:

• The retirement may not have been their own choosing. They may have lost their job for some reason and thought they would give retirement a go, only to find they weren’t retiring on their own terms.

• Voluntary redundancies. They work for a big corporate, a new leader comes in and does a restructure and some voluntary redundancies are offered. The money looks attractive, they are around the age of 60, so they take a package. After they’ve taken the overseas holiday and painted the house, they get bored.

• A career change. They’ve done the same thing for the last 40 years. They are sick of it, retire and then work part time in a completely different field. The part-time work is often on their terms and fits in around holidays and looking after the grandkids.

When you could access your super at age 55, I encountered a number of people who would ‘try’ retirement. However, it’s a lot less common now that you can’t access your superannuation until you are 60.