In today’s society, many older Australians want to work longer before retiring, however many are not preparing for the end of their working years. Studies recently released by Fidelity have shown that people usually retire earlier than they originally planned. Sometimes it's out of their control, but often it’s not.

Increased opportunities for older workers

The COVID-19 pandemic has changed the way people work in Australia. Instead of working in an office from 9 to 5, many people can now work from home and have a more flexible schedule. This means that various jobs can be done without having to go to the office every day.

This change can be a good opportunity for older people who have higher education or skills. There are also other factors that make working more suitable for older workers. Due to the pandemic, fewer people have come to Australia from other countries, which means there are more job opportunities for those who are already here. Although the number of people coming into Australia has increased, it is still not up to the level as prior to the pandemic.

Current low unemployment rates

The low unemployment rate, combined with the lack of skilled workers, means there is a real opportunity for older workers (who may have been overlooked in the past) to continue contributing to the workforce.

Why are we retiring earlier than expected?

There can be several reasons why the length of time we have until retirement is shorter than expected. The average age at which Australians plan to reduce their work commitments and transition into retirement is 62.5 years, and the average age we would like to retire fully is 64.8 years. But the reality is somewhat different. The average age at which Australians start reducing their work commitments is 61.4 years, and the average age we fully retire is 63.4 years. This ultimately means that you have less time to save for your retirement.

Health problems

Health issues can force individuals to retire earlier than planned. Early retirement from physical illness can also lead to mental health concerns, however focusing on your relationships, growing your friendships, or making new ones, community involvement and education can all be positive factors towards reducing any mental ill-health.

Unexpected job loss

Although the outlook is currently favourable for older workers, losing a job unexpectedly via redundancy can force individuals to retire earlier than they had planned. Redundancy, as a reason for early retirement, generally creates two types of retirees. Firstly, those unlucky enough to have a golden parachute from their employers. A generous payout shouldn’t be squandered, and those that make plans, contributed to superannuation or other tax-effective vehicles may be able to retire effectively. However, those without are often forced to access superannuation earlier and subsequently forced to take lump sums or draw down more from their Transition to Retirement Income Streams.

The importance of having a sense of control

Having control over when we retire is important for how happy we feel. People who are semi-retired and feel like they have control over when they stop working full-time are often happier than those who don't feel in control. And whilst we can't control everything about our retirement, we can control some things. By making a plan, we can reduce the chances of losing our job and be prepared if we get sick or need to care for someone who is sick. So, who do most people turn to in their hour of need? Not surprisingly Financial Advisers and Accountants are popular choices for professional advice.

Now is the time to take control.

Many of us focus on building our careers but don't think about the end of our careers. Although most people want to gradually retire, very few people do much to make it happen.

Come in, chat to us and let’s get started on making the most of your future.

Extracted from Fidelity’s report New Life, Old Life.

Why is it that we tend to retire earlier than expected?