When Age 65 is Too Young to Retire

Written and accurate as at: 9 December 2013

Turning age 65 may signal retirement for many, but age is just one of many triggers that may indicate that you are ready to retire. Others include being unhappy with your work, losing a job and having difficulty finding a new job, a health scare, receiving an inheritance or windfall and the influence of family and friends.

For some, there is a natural progression towards retirement: knowing exactly when it’s time to stop working but for others the decision may not be as easy. What happens if you reach 65 and aren’t ready to retire? Here are a few signs that you might not be ready to call it quits on your working life and may be better delaying your retirement:

You are working and you enjoy your current job:

If you are in a job that you enjoy and find stimulating, then you may not necessarily want to retire.
Often our roles and sense of purpose are defined by our jobs, so retiring means that we need to find a new purpose.

While the initial part of retirement can feel like a holiday, once the holiday period is over some people struggle with all the free time and independence. Whilst some retirees decide to return to part-time or full time work in order to get back some of the structure and purpose they feel is missing, re-entering the work force may not be as easy to achieve as job seekers over the age of 55 find it more difficult to secure new employment than younger workers.

Rather than give up work altogether, an alternative option is to consider a transition to retirement by slowly reducing working hours, which can help you to adjust. It can also be surprising how another year or two in the workforce can positively affect the longevity of your retirement capital.

Your retirement nest egg isn’t quite big enough:

At 65 years, your average life expectancy is 21.62 years (if a female) and 18.54 years (if a male), which means that your retirement savings are going to need to support you for at least another 20 years.

The AFSA Retirement Standard suggests that for a couple to live a ‘comfortable’ life in retirement you will need an income after tax of just over $57,000 a year in today’s dollars (while a single person needs an income of just under $42,000 a year in today’s dollars). However, as a general rule when planning for retirement, to achieve a similar lifestyle to the one that you’re enjoying during your working life, you need a minimum of 60 to 65 per cent of your pre-retirement income in retirement.

If you are unsure whether you have enough to afford a comfortable retirement, then you should seek financial advice to help you plan and prepare financially. Being prepared and knowing that you are on track to meeting your income goals in retirement should make the decision to retire easier and help to reduce the stress of monitoring the impact of market fluctuations on your retirement capital.

You just don’t feel ready to retire:

Just because your family, friends, or colleagues may think it’s time for you to retire – it may not mean that you are ready to call it quits. 65 is no longer necessarily considered old as people are much fitter and healthier at retirement age than they were decades ago.

If at age 65, you have little to no pastimes or interests outside of work, retirement may lack purpose or value and you may quickly become bored.

Preparing for your retirement involves more than just financial management and consideration. You will need to be prepared mentally so you can fully enjoy your freedom and retirement. The likelihood that you can enjoy a healthy, happy and relatively independent retirement will largely depend on you having a combination of affordable pastimes and interests that stretch your mind and keep your body moving.