Retirement is not for me!

Written and accurate as at: 11 May 2015

While many of us can’t wait to finish work and retire, it seems that an increasing number of Australians are also choosing to delay or postpone retirement and opting to maintain an active lifestyle and career into their 70’s and beyond.

According to a survey conducted by the Australian Bureau of Statistics (ABS), almost one in five Australians over 45 years of age who intend to retire, plan to retire from the work force at 70 years and older.

So why are people deciding to delay retirement? A decision to do so is not always made for financial reasons. Many other social and personal factors may influence whether someone is ready to give up work.

Often a person may choose to defer their retirement because the decision to do so gives them:

  • More time to save for their retirement. The years immediately prior to retirement are often some of the best years in which to accumulate wealth as typically people are child and mortgage free.
  • Less retirement years to finance. With the average life expectancy on the rise, delaying retirement can mean that there are fewer years to have to financially provide for in the future.
  • Social Interaction. For many people their main social interaction is with their colleagues and peers. Giving up work can seem socially isolating and potentially lonely.
  • A sense of purpose. Staying employed can often provide a way for people to achieve goals, receive recognition for their efforts and to be part of a team.
  • A way to give back. Many people approaching retirement have many years’ experience, knowledge and skills that can be passed onto the younger generation and workers. By continuing to work or volunteer people can leave a legacy or support the community that supported them in their career.
  • A sense of security. Switching from a regular pay day to having to support yourself or rely on Government funding or pensions can be a major mindset change for some. The security offered by secure employment can be hard to let go of.
  • A way to stay physically and mentally fit and healthy. Staying active can help people to feel better longer.
  • A source of pleasure. As much as many people can’t wait to retire, others enjoy their jobs and find contentment and pleasure from being employed.

While retirement may not be planned for some, unfortunately, we don’t always have the luxury of being able to plan the exact timing of our retirement and sometimes people can be forced into an early retirement as a result of factors that are out of their control such as:

  • Deteriorating health and physical wellbeing leading to inability to perform their job.
  • A downturn in the economy or recession leading to retrenchments and redundancies.
  • Technological advances and industry changes making jobs and roles obsolete.
  • Age Discrimination and replacement of older workers with younger ones.
  • Obligations to look after a spouse, sibling, parent or child needing care.

Whether considering retirement or planning to postpone or defer it, it remains important to still prepare financially and save for the future. It is true that the Australian superannuation system is designed primarily for our retirement years in mind, but superannuation is simply a tax-advantaged savings fund that can’t be accessed until a fixed point in the future. That point is typically either ‘preservation age’ or age 65 (whichever comes first). Those working past age 65 can generally access superannuation and use the money any way they choose.

There are many advantages to building your superannuation whether you plan to retire or not. The biggest incentive is that superannuation is tax-effective. Investment earnings are taxed at 15% whilst in accumulation phase and 0% once a pension is commenced. Withdrawals from superannuation after the age of 60 are tax-free.

By accumulating wealth in superannuation you are tax-effectively preparing for the future. A superannuation “nest egg” can provide more than just a retirement income stream, it also provides options to those who wish to continue working, in the form of a safety net and financial security.