Jul 30, 2021

Our Insights

When should you retire?

The simple answer: It's up to you.  

Some people want to work for as long as possible, others hope to retire early. Regardless, it’s always smart to plan for a longer retirement than expected. The key word: plan. Whatever the vision is for your retirement, you need a strategy to ensure it comes to fruition.

Here’s just a few of the key considerations.

Rethinking retirement

Australia doesn't have a fixed retirement age, so it's up to people to weigh up their finances, employment, health, relationship status and retirement goals to work out when they will transition out of the workforce.

While the average age of retirement is between 62 and 65, we are living longer than previous generations and expect more from our retirement years. These factors impact the money you’ll need to enjoy your ideal retirement. 

To future-proof your retirement, it's essential to plan for it as soon as possible. 

Living longer

Life expectancy is rising. According to the Australian Institute of Health and Welfare, the average life expectancy for women is 87, and for men it is 84. If you retired at 60, that would mean well over 20 years spent in retirement. You’ll need to fund your lifestyle for that time, while also expecting to pay more in health and aged care costs than previous generations. It's vital to have funds to support living expenses as well as other additional costs that enable you to live the life you want in retirement.

Rise of older workers

Rather than halting work completely, many Australians choose to dial down on their work commitments or work part-time once they reach their expected retirement age. Australia's expensive property market can also push retirees to work later in life or use their super to pay for their mortgage. In addition, the pandemic has reduced superannuation savings for many as they chose to withdraw savings to weather the storm. These financial pressures are forcing retirees to stay in the working world longer than their predecessors. 

Accessing pension funds

Your Preservation Age and your Age Pension age can be a helpful guide to plan your retirement age, as they determine when you can access your super or Australia's Age Pension. It's beneficial to work out when you could access these funds, however, it's important to note that the eligibility age for the Age Pension is rising. Advice from a professional is essential to understand when you can withdraw savings and government funds.

Additional pressures

Navigating your finances can be difficult at the best of times. The latest available figures from Women In Super show that women currently retire with 47% less superannuation than men. This is particularly concerning, given women have a longer life expectancy. So it's vital to plan for the future. 

Additionally, if you're self-employed, it's critical to ensure you're investing in your future post-work, as self-employment doesn't stipulate guaranteed superannuation payments. 

Plan ahead

Whatever retirement looks like to you, it's critical to plan ahead to ensure your retirement goals are achievable. Talk to the team at Calder Wealth Management to discuss how to structure your finances and guide your decision-making process. Call us on (08) 8373 3333 to schedule your free initial appointment.

Written by James Herriman at Calder Wealth Management. 

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstance or seek advice from a financial advisor and seek tac advice from a registered tax agent. Information is current at the date of issue and may change.