Early in 2017, News Corp and Industry Super Funds did a study to try and see whether Aussies were ready for retirement1. Spoiler alert: we’re not. Only 21% of workers think they’ll have no financial worries in retirement. Most people expect to retire with a lower super balance than they’d like to retire with. One of the side effects of this is that Australians are increasingly looking at continuing to work while retired. It’s almost like there’s one ‘official’ retirement, and one real retirement, perhaps over a decade later.
The majority of baby boomers (59%) think they’ll keep working beyond retirement age (65). This means delaying retirement, but it also means working part-time, casually or on contract(s). That said, 8% do think they’ll have to keep working full time. It’s a sad thing to consider when you look at how our society values retirement. Retiring is seen as a reward for a long life of hard work. Back when retirement was ‘invented’ (late 1800s, early 1900s2) it was talked about as something that older people deserved after years of loyal service to their company or contributing to the economy.
Why the pessimism?
So why don’t most baby boomers think they’ll retire? Well, mostly it’s down to not having enough cash to pay for everything. Forty-eight percent of boomers think they’ll need the money. Forty-seven percent say ‘the money will come in handy’. Only 23% say it’s because they love their job so much, they don’t want to stop.
Boomers with low (under $200K) current or projected super balances were more likely to say they’d keep working because they needed the money. What this might mean is that a) most older Aussies approaching retirement don’t have enough super, and b) they think super is the best way of saving for retirement.
Is working after retirement really a bad thing?
On the plus side, plenty of baby boomers surveyed for the study said that they’d keep working for relatively positive reasons. Fifty-three percent think they’ll continue working to keep busy. And 21% think they’ll do volunteering work, contributing to their local communities and pursuing the kinds of things they couldn’t do when their choices were based on how much they got paid.
Although most people would prefer to retire ‘early’ (before 65) or on time, the study didn’t talk about how they feel about continuing to work. It’s possible that lots of older Aussies don’t love their job so much they can’t imagine leaving it, but they’re also perfectly content with continuing to work, especially if there are financial practicalities to consider. And on a side note, a few different studies say that working past retirement age - if you’re physically and mentally up to it - can be really good for your health3.
It’s also clear that some baby boomers expect to rely on things other than work and super for their retirement income. For example, 40% of them think super is the best way to save for retirement - but close behind, 34% think property is the best bet, and 6% say shares outside super.
1 Retirement Expectations Study, prepared for News Corp, January 2017
2 https://www.theatlantic.com/business/archive/2014/10/how-retirement-was-invented/381802/ Accessed 12 December 2017.
3 For a handy summary, see: http://www.investopedia.com/articles/retirement/051216/why-working-after-retirement-good-your-health.asp Accessed 12 December 2017.
This article is general information only. Readers should consider getting financial advice before making financial decisions.