Thinking of Retiring, discover 15 important non-financial retirement essentials you need to know about at no cost to you so you can plan before it’s too late.
Learn what they don’t tell you about Retiring.
Although most of the advice provided about your retirement is centred on financial planning (which is vital) there’s much more you need to consider and plan for. Many of us rely on professionals for our advice but what if I can give you the essential information to help you make better-informed decisions and saving you money!
By the end of this article, you’ll know the information you need to know in relation to retiring. All in the one place! You’ll be better armed with the information you need–at no cost to you.
1. Retirement is a big deal
Determining when to retire is important. There are several things you need to consider and try to make sure you organise can make you feel overwhelmed.
You have been so focused on the financial side of retirement you consider the other areas which will be affected by your retirement decision.
Such as your:
- Mental preparation,
- Social interaction
- Health and wellness, and
- Financial aspects of life after work
These aspects of your life should be considered and planned for if you want a successful transition from Work to a Retirement Lifestyle you would be happy with. This will ensure you will you would be happy with. These other areas need to become a priority to make sure you are making the best decision for your next phase of life.
Your retirement can be a fulfilling and enjoyable (and lengthy) phase of your life. The best way to make sure that it will turn out this way for you is to approach your retirement with your eyes wide open. So you’ll have a realistic and fact-based holistic view on what your retirement will be like, both from a financial and a lifestyle perspective.
2. Your first step to retiring
The first step should be to talk with your significant other/ partner to ensure your retirement plans and ideas are aligned. This can include
- are you going to live in another location when you retire,
- what activities you both would like to pursue in retirement.
- what each other’s needs, wants and wishes for retirement are.
Compulsory retirement is unlawful throughout Australia. but, there are exemptions. So, with no set retirement age in Australia, the date you retire from work is up to you.
It will be based on your personal circumstances often a combination of your health and financial circumstances. Knowing you can afford to fund the lifestyle you want is the crucial part of your decision.
Part of setting your retirement date should revolve around when will your partner be able to retire. So take a proactive approach and decide on a date you wish to retire on.
This is only part of what you need to contemplate when you are trying to make the best retirement decision. If it’s something you’ve been thinking about, here’s other essential related retirement information you need to consider.
3. What age are Australians Retiring?
The average age of retirement for persons in Australia, according to 2016–17 statistics, is 55.3 years—58.8 years for men and 52.3 years for women (1).
This should ring alarm bells for you if you were contemplating retiring at 65. Especially, if you had planned to bolster your super with additional contributions in the final 7 years of your employment!
Figures released last year also revealed that more Australians were retiring later in life compared to years ago and retirement was not a one-time event, with
26.7% of those in the 45 to 54 and 55 to 59 age groups returning to employment annually (2).
This return to some form of employment is based on both boredom and the need for additional finances. For this reason, you may want to consider the age you’ll be able to access your super and the government’s Age Pension (if you’re eligible for it), which won’t be at the same time.
4. When can I access my super?
Generally, you can access your super when you:
- reach preservation age and you retire
- cease an employment arrangement after age 60
- turn 65, whether or not you stay in the workforce
- reach preservation age and implement a transition to retirement strategy whereby you can withdraw money from your super while continuing to work full-time, part-time or casually.
5. How can I receive my super?
You have several options in relation to your super when you access it. These include;
- Taking a super lump sum to pay off your home mortgage or other debts but you need to consider what you’ll live on if you have no super left.
- Moving your super into an account-based pension (or allocated pension)–if you wish to receive a regular income in retirement this account-based pension may be for you. Though you need to meet the minimum yearly withdraw amounts.
- Purchasing an annuity–You can use your super savings to purchase an annuity which provides regular payments over a set number of years or for the rest of your life depending on the option you choose.
6. Can I return to work if I’ve accessed my super?
You can return to work, but if you declared your permanent retirement, you may need to prove your intention was genuine at the time.
According to retirees who returned to full or part-time employment, the most common reasons they went back to the workforce was a financial necessity, closely followed by boredom (8).
7. What about the Age Pension?
To be eligible for a full or part Age Pension from the government, you must be 65 or older and satisfy an income and assets test, and other requirements (6).
In July, the qualifying age for the Age Pension increased to 65 and 6 months, and it will continue to increase by six months every two years until 1 July 2023 when the qualifying age will be 67. Unless the government wishes to amend the age again.
8. Considering your health in your Retirement
Another factor to consider isn’t just working for longer, it’s whether you’ll be healthy enough to keep working for as long as you want or need to. Also, will you be healthy enough to engage in the activities you are wishing to undertake once you retire?
Health is a key factor for workforce participation for mature-aged workers and in your ability to accumulate super and private savings to fund your retirement and enjoy your retirement.
Research shows the key issue for
Australians aged between 60 and 70, is the proportion of people reporting fair or poor health increases, with predictions that by 2035, one in four men and one in five women in their 60s will have poor or fair health (9).
As for the benefits, the Australian Medical Association (12) says regular exercise has the potential to:
- increase life expectancy
- reduce the risk of some cancers, cardiovascular disease, and type 2 diabetes
- reduce high blood pressure and the risk of falls
- improve bone health and body mass
- ease feelings of stress, anxiety, and depression
- enhance mobility and balance
Researchers believe many supposed age-related changes are lifestyle-related. Memory loss, for instance, can reportedly be improved by 30% to 50% by keeping the brain active. (13)
Getting older doesn’t mean that the mind stops working, as it once did. But, some conditions and events more common to older age that affect brain function include:
- Heart disease and stroke
- Dementia, such as Alzheimer’s disease
- Diabetes mellitus
- Parkinson’s disease
- Poor nutrition, vitamin deficiency
- Medications – prescribed medicines should be reviewed so that unwanted side effects are avoided, and drugs should be discontinued if they are no longer required
Many of the conditions that may affect brain function can be managed effectively. The following factors have proved to be important:
- lifestyle and diet changes
- keeping an active body is crucial if you want an active mind
- monitoring tests for hypertension, cholesterol, and diabetes
Other ways to do this could include:
- taking up a sport, hobby or activity or engage with an interest group
- return to work either in a part-time or casual capacity
- reading and doing crossword puzzles, or playing card games or chess
- downloading various smartphone apps, where you can play word games online or complete various brain teasers daily.
Remember, making time for regular check-ups is a great way to take care of your overall health and make sure you stay on top of any issues before they escalate.
9. Longer retirements come at a cost
Increased life expectancy means more time to pursue the things you may want to do for fun in retirement that you’re passionate about, but the catch is, more years in retirement will come with a price tag.
Research indicates many Australians will not have the funds to live comfortably in the years after they’ve finished working (3), which is why you may need to consider working for longer to boost your retirement savings.
Meanwhile, if you’re pinning your hopes on living off the Age Pension – that’s if you’re eligible for it is to keep in mind the government has proposed increasing the eligibility age to 70 by 2035 (10). And, the money you’ll receive from it will cover less than a modest lifestyle (11).
Given Australians across the board are likely to enjoy greater life expectancy into the future, it’s worth giving some thought to your retirement plans of exiting the workforce so you’re prepared.
Many of us will spend more than a quarter of our life retired!
10. The amount of money you will need
This is an individual perspective. However, the Association of Superannuation Funds of Australia (ASFA) provides a Retirement Standard benchmark of the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years.
It is regularly updated to reflect inflation and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle. A modest retirement lifestyle is better than the Age Pension, but still only able to afford basic activities.
Whilst a comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and holiday travel – domestic and occasionally international. It is important to note that both budgets assume that the retirees own their own home outright and are healthy.
Data from the Association of Superannuation Funds of Australia (ASFA) shows couples aged about 65 living a comfortable retirement needs to spend A$60,604 per year, and singles A$42,953. (16)
Those living a more modest lifestyle need to spend A$39,442, and singles A$27,425. This would equate to approximately $640,000 that a couple would need to live a “comfortable retirement” and a single person will need approximately $545,000.
11. Ageism – The complication to Retirement Plans
Many older Australians struggle to find work once they reach their 50s and 60s, as 30% of Australian employers enforce an age limit for job applicants, with 68% of those admitting 50 years of age or older are at the age at which they are unwilling to recruit workers. (17)
Though this is widespread it’s illegal under the Age Discrimination Act in Australia for companies to discriminate against job applicants based on age. These facts would point to if you are made redundant or retrenched and you are over 50 years of age you will be unemployed for a very long time. In fact, you may not be re-employed and only come off the government Newstart unemployment benefit payment allowance once you transition to the Age Pension.
This issue combined with living longer and being healthier is creating a whole set of financial challenges as we age. Everybody needs to accumulate enough wealth throughout their lives to generate sufficient income to lead a quality lifestyle in their later years.
Many older people have not foreseen or factored in long periods of unemployment in later life and the only way to sustain themselves is to use their savings which in turn erodes the ability to save for their retirement years.
12. The benefit of downsizing for retirement
If you’re an Australian aged 65 and over and you are downsizing your home of 10 years for retirement you can now contribute the proceeds from the sale of your main residence (up to $300,00 per person or $600,000 per couple) into your superannuation (14). Regardless of your work status, superannuation balance, or contribution history.
As with any government initiative you need to seek the appropriate advice and research what implications undertaking this option would have on your overall financial status such as your eligibility for the Age Pension.
13. Issues if you retire overseas
If you’re an Australian citizen or permanent resident, your super will remain subject to the same rules if you leave the country for a holiday of a lifetime, new opportunities or permanently.
Therefore, generally, you won’t be able to access your superannuation until you reach your preservation age. However, if you’re moving to New Zealand, different rules apply. After you’ve migrated, you can leave your super in Australia or you can transfer it to a New Zealand KiwiSaver account under the Trans-Tasman Retirement Savings Portability scheme (15).
If you are accessing an Australian pension and you live overseas, access to your pension will depend on several factors including the length of your time abroad, whether your assets or income have changed and if the pension is delivered through a social security agreement that Australia has with the country you are living in.
Australia currently has 31 agreements with countries that overcome barriers to pension payments. If you live abroad for more than five years, and permanent residents living overseas for more than a year, you would forfeit the right to Medicare.
There are other conditions that as a pensioner you would need to consider such as when you return to Australia after residing overseas you cannot travel outside the country for more than six weeks within a two-year period of returning or you may suffer reductions in your pension payments.
If you are an Australian pension recipient it is important for you to log your travel plans through Centrelink’s online portal if you are planning on going overseas for more than six weeks.
If you are considering relocating and retiring to another country as an affordable alternative, ensure you understand the implications.
According to ABS data ……………..
In 2016, 11,660 Australians aged over 55 relocated overseas
a significant jump from the 7,910 who moved in 2005.
14. The need to be mentally prepared for retirement
When you transition into retirement many people experience issues adjusting from a life of work to a totally different lifestyle and routine.
As retirement means major lifestyle changes you need to ask yourself Are you mentally prepared for your own retirement?
Retirement is one of the biggest life-changing experiences you will encounter in your life and as such you need to reset your thinking, expectations, and mindset.
You will initially experience the physical change of not leaving the house to go to work anymore together with the new routines that retirement will bring for you.
The second aspect and the most important one regarding retirement is your mental outlook to this dramatic change and making sense of your new lifestyle, expectations, and routines.
You may not adapt quickly, and most likely experience a range of feelings such as loss, frustration, irrelevance, anger, lack of self-worth, anxiety, and boredom. This is common for many retirees to experience a range of these emotions. You need to recognise and acknowledge these feelings and seek the help that will guide you into enjoying the best years of your life.
Alternatively, you may waste several years or more coming to terms with and accepting (some people never do) this change and rob yourself of having the best retirement you can have.
15. What people don’t tell you about retirement
There are several important points that no one tells you about retirement…….
There are issues that people don’t discuss, your retirement and mental health. These can affect you at any time and certainly develop after this life-changing event.
Some studies suggest retirement increases the probability of suffering from clinical depression by about 40%.
- Retirement may increase depression, it can occur sooner than expected, especially if you perceive that you were forced into retirement due to being made redundant later in life and it is has occurred abruptly rather than being a gradual or planned transition (19).
Especially when you thought you would retire at the age of 65 when you believed you were financially ready, and you would be having the retirement life you dreamt of.
- Studies have shown that those that have retired will have an increased probability of having at least one diagnosed physical condition by about 60%. (18) Have you ever considered or planned how you would deal with these health limitations.!
- Often overlooked in your retirement planning is that your relationship with your spouse/partner will need to change once you retire.
You will spend more time with each other than you ever had besides during your annual leave. This becomes an issue if you have retired and they still want or need to work for another 5-10 years.
- You may not have considered that you can become and feel more socially isolated once you retire due to limited social interaction and relationships formed in your workplace.
Once leaving your workplace many retirees feel a loss of status, identity, self-confidence, and often a purpose in life. The combination of these feelings can lead to an increase in alcohol consumption and both prescription and illicit drug misuse, particularly cannabis. (20)
Thousands of people retire every day, but many struggle as the concept of retirement has transformed from what our parents experienced and what you may have thought it would be.
Consider your mental preparedness and planning for retirement like you consider your financial planning. As your retirement may be your best and only opportunity to do what you really would like to do.
Retiring – The Conclusion
After a lifetime of meeting the needs of your family and work, now it’s time to put yourself and your partner first. Start by creating a plan for a meaningful and joyful retirement.
Set a handful of realistic goals and steps to achieve your goals.
To make your retirement fulfilling, meaningful and enjoyable irrespective of your finances you need to organise your thoughts in planning how you will be living this next stage of your life – as this can be another 25 years.
Like so many areas in life, if you have a plan, your chances for success are greatly improved. Your retirement happiness increases if you invest the time to outline goals and action steps.
You are only going to get one opportunity in life to possibly reinvent yourself and have the retirement of your dreams. This can only be achieved through mental preparedness.
If you are having: difficulties starting planning for retirement becoming frustrated during the process suffering from procrastination wanting someone independent to talk to for advice you may find it helpful to Get in Touch With Us today.
Is there anything I have missed? Let me know with a comment below?
Useful websites for you:
- If you wish to access a range of free retirement tools including a Retirement Planner Calculator go to the ASIC’s Money Smart an Australian Securities and Investments Commission website, has free and impartial financial guidance and tools to help you secure your financial future for free.
- ASFA’s consumer website – Super Guru retirement tracker – What kind of retirement can you afford?
- Financial Planning Association of Australia provides a list of authorised financial planners in your area to help you manage your financial affairs and meet your life goals
- Your Rights at Retirement guide, produced by the Australian Human Rights Commission, covers topics including health, aged care, wills and end-of-life decisions.
- The Smart Traveller website has information for seniors about preparing for your trip, staying healthy and getting help overseas.
1 ABS – Retirement and Retirement Intentions, Australia, July 2016 to June 2017 paragraph 6
2 The Household, Income and Labour Dynamics in Australia (HILDA) Survey 2017 pages 65, 67
3 The Australian Taxation Office – Accessing your super table 1
4 ASFA retirement standard – June 2017 quarter table 1
5 Department of Human Services – Payment rates for Age Pension table 1
6, 7 Department of Human Services – Age Pension (eligibility and payment rates)
8 ABS – Australian Social Trends – Older people and the labour market paragraph 26
9,10,12 AMP.NATSEM 2015 report, Going the distance: Working longer, living healthier pages 2, 27
11 The Association of Superannuation Funds of Australia – Retirement Standard paragraph four
14 Turnbull Government delivers leg-up for first home buyers and downsizers press release
15, 4 ATO – Trans-Tasman retirement savings portability scheme for individuals
16 https://www.superannuation.asn.au/resources/retirement-standard, June quarter 2018
17. Employing Older Workers Research Report – Australian Human Rights Commission October 2018
18. Work Longer, Live Healthier Discussion Paper – Institute of Economic Affairs May 2013
19. Work Status, Retirement, And Depression In Older Adults Dec 2018 – SSM Population Health
20. Australian National Drug Strategy Household Survey – Sept 2017