Will you ever really retire?
What is retirement? Do you know where your income will come from when you retire? And how much will you need to retire on? In this article we look at why many Australians are retiring later and if that’s a good or bad thing. We also provide additional information about retirement and how you can get the retirement you want.
When retirement was 'invented' (late 1800s/early 1900s1), it was regarded as something older people deserved after years of loyal service to their company or contributing to the economy—getting the ‘gold watch’ at 60 (or earlier) and living a (reasonably) comfortable life in their sunset years.
These days, the concept of retirement has changed. People are living longer. And while some want to keep working, many need to keep working. In early 2017, News Corp and Industry Super Funds did a study2 to try and see whether Australians are ready for retirement. The answer is—we’re not. In fact, just 21% of workers think they'll have no financial worries in retirement. Most expect to retire with a lower super balance than they would like. In the study, 59% of baby boomers think they will keep working beyond retirement age—delaying retirement, working part-time, casually, or on contract—while 8% believe they’ll need to keep working full-time.
Why the pessimism?
The question is: why do most baby boomers think they won’t retire by or at retirement age?
It boils down to not having enough money to pay for a rising cost of living. In the same study, 48% of baby boomers think they'll need the money, 47% say the money will ‘come in handy’, and 23% say they don't want to stop working because they love their job so much.
Baby boomers with low (under $200K) current or projected super balances were more likely to say they would keep working because they need the money. It seems reasonable to suggest that many older Australians approaching retirement age don't have enough super but think that super is the best way of saving for retirement.
Is working after retirement really such a bad thing?
More positively, plenty of baby boomers surveyed for the study indicated that they would keep working for relatively positive reasons. 53% think they’ll continue working to keep busy, and 21% think they'll do volunteering work and pursuing the kinds of things they couldn't do when their choices were based on how much they got paid.
Although most people would prefer to retire 'early' (before 65) or on time, the study did not cover how they felt about continuing to work. Many older Australians might not love their job so much they can't imagine leaving, but they’re content to continue to work, especially if there are financial practicalities to consider. Interestingly, different studies say that working past retirement age—providing you’re physically and mentally up to it—can be really good for your health3. It's also clear that some baby boomers expect to rely on things other than work and super for their retirement income. For example, 40% of them think that super is the best way to save for retirement, but close behind, 34% think property is the best bet while 6% believe shares outside super are a good investment.
Want to learn more about setting up multiple income streams in retirement? Remember, you’ve got access to a great range of investment and retirement modules online. What you learn could change your retirement lifestyle for the better:
- Understanding retirement
- Making your retirement work best for you
- Get advice from our financial planners to help you get a better retirement
- Transitioning to retirement
- Managing your income in retirement
- Learn to budget for your retirement
This advice has been prepared without taking into account your objectives, financial situation or needs. You should therefore consider the appropriateness of the advice in light of your individual circumstances before acting on the advice. You should also obtain and consider a copy of the relevant Product Disclosure Statement available at www.vicsuper.com.au before making any decisions. VicSuper Pty Ltd ABN 69 087 619 412, AFSL 237333, Trustee of Victorian Superannuation Fund ABN 85 977 964 496.
2Retirement Expectations Study, prepared for News Corp, January 2017
3For a handy summary, see: www.investopedia.com/articles/retirement/051216/why-working-after-retirement-good-your-health