Planner: Retirement thinking "is dumb"

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It has been said time and again, that too many Australians are not ready for retirement, but it isn’t necessarily just financial unpreparedness that is concerning one financial planner.

Paul Benson, principal financial planner at Guidance Financial Services, says that people are being forced into retirement by society, and often end up bored and unhappy. He has started to question whether Australians have got this retirement idea completely wrong.

“Too often I’m coming across people who are retiring, not because they can no longer work, and not because they no longer wish to work, but because they feel that they should retire,” says Benson.

“Usually it’s that they hit 65, and either there’s a feeling that it’s time to get out of the way and let the younger ones have their shot, or that they’re entitled to an age pension, and so they would be ‘crazy’ to work on and in effect pass up their ‘entitlement’."

Because people are doing less manual labour, it’s not as necessary for everyone to retire so young due to their bodies being worn out, says Benson.

When the pension age was originally set at 65, life expectancy for males was 67, so the pension was only intended to support those at the very end of their life. Nowadays, a 65-year-old male is expected to live until 83 on average and a female to almost 87, and every time these figures are revised, the numbers go up.

Guidance Financial Services recently surveyed their clients about retirement. When asked “Why do you expect that you will retire?” 55% of respondents selected “to enable me to do the things I can’t do whilst still working, such as extended travel”. When asked how they expect to fill their time in retirement, 91% nominated hobbies and 83% travel.

Benson questions this way of thinking, asking why Australians put these things off until retirement when they run the risk of health issues. He suggests that once the mortgage is paid off and the children leave, people can cut down their hours of work to fit in their hobbies.

He says that the expectation (for males at least) to work 40 plus hours a week until 65, then cease work altogether and enjoy caravanning and playing golf until health issues kick in, “is dumb!”.

“Our thinking on retirement is outdated. If you are fit and healthy and want to continue in the work force, then you should be able to do so no matter what your age.”

  • Jeff Worthington on 20/09/2013 10:07:17 AM

    Paul is so right. Travel, hobbies, golf etc can only fill up so much of the day. There is a lot of pressure from society in general once people reach a certain age to retire. Some do it successfully but a lot,especially men, seem to struggle. As someone just past the accepted retirement age I can't think of anything worse than retirement right now. My wife, who worked in a much more physically demanding job, loves her retirement. She worked hard to make sure she had plenty to fill her time in a meaningful way. If work is satisfying and enjoyable why would you give it away until you feel really ready to do so. As Paul says current thinking is long out of date and there needs to be more encouragement to keep older people in the workforce.

  • Innocent Observer on 20/09/2013 10:08:05 AM

    For sheer impact, some of the best (most life-changing) conversations we have had with clients is talking about how they can achieve more by working less. For many people the idea of scaling back to 4 days a week is like the best of all worlds - they have their health, a long weekend every weekend plus the social interaction and satisfaction of accomplishment they get from work.This is what it's all about.

    The cost? For some it might be less inheritance to the kids, learning to live off $10k p.a. less or working part-time for an extra year or two in a job they love. So what? Another 20-years of daily grind or 22 years of long-weekends and living life. Take your pick.

    We shouldn't forget that "Financial advice" is not about making the richest guy in the graveyard, it's about helping and educating our clients so they can achieve what they want within the bounds of their financial capacity. As a profession we shouldn't underestimate the impact we can have on our clients' lives.

  • Peter Grace on 20/09/2013 10:15:11 AM

    As a soon to be 67 year old I agree. Sitting around retired is dumb. If you want to travel in retirement working part time isn't much good. You need flexible employment (like contracting or casual work) so you can go away for 4-5-6 weeks (whatever). A good goal is say you want to work 9 months a year (say) and have 3 months off. This way you can keep the challenge and enjoyment of work, keep the money coming in (at a lower level) and have time for travel. My wife and I are off to Antarctica next month.

  • frank smith on 20/09/2013 10:19:18 AM

    Best I have read on the subject of retirement ever. It's society's biggest con job and God's waiting room for those who are left unhappy and valueless. There's only so much travel or golf you can do and it's a shock when it's realised no one relies on you anymore.
    Wise up and die in harness. Well said Paul.

  • Eric Taylor, CPA on 20/09/2013 10:45:02 AM

    An interesting article, with some truth in it. In addition, I am currently structuring my "retirement" to be able to work until I am 70, 10 years away, but in a way that suits me, such as being able to work remotely. My plan is to be able to use my skills from within a mobile office as I travel around this country.

    It is interesting, however, to talk with so many retired people who are now struggling to work out how they actually had the time to work before they retired.

    The answer must be in finding a balance.

  • Alistair on 20/09/2013 10:59:09 AM

    Its time government and all those that have anything to do with this concept started destroying this myth.
    A successful retirement is not merely about money. Retirement to what. A day where your chores are finished around the house by 11am, then perhaps see the odd friend if they are still around and not deceased to discover more and more medical issues such that your GP is becoming more familiar with you than you would like, watch the daytime soaps, then repeat the process again tomorrow while waiting for your turn to pass away.
    Seriously, the system also has to deal with cost of care, mental health issues as well as finances.
    Lets rethink this concept and do this properly.
    One day, it will after all be our turn !

  • Don Swanborough on 20/09/2013 2:28:57 PM

    Those in this industry who are 60 and over will have great knowledge and life experience to be of tremendous value to the "baby boomer" generation pre and post retirement. What a tsunami of potential!

  • Jenni Devlin on 20/09/2013 4:32:47 PM

    All for more flexibility in the workplace - for those wanting to scale back and enjoy life while they are healthy, for those with family responsibilities. In meaningful work - not just retail or hospitality. Up to the employers to become more flexible around working conditions. We can't all be self employed - most aren't.

  • Brian Luckhurst on 20/09/2013 6:26:24 PM

    I retired from full time employment in March this year but in 2009 we set up our online home exchange travel business to keep us busy in retirement. Since retiring, I have spent part of most days 'working' on our website, developing and marketing it to increase our member numbers.

    I would recommend becoming self employed in retirement but it takes much research and do something you enjoy.

    Being able to retire for us baby boomers is getting more and more difficult and worrying. Can I also recommend that for those who want to travel, either before or after they retire, that they think about Home Exchange for a vacation. Swapping homes saves money but also provides great travel experiences. Why pay for a hotel room or rent a villa when you can stay for free?

    Cheers

    Brian

  • Jeff Worthington on 20/09/2013 11:23:44 AM

    Like Eric Taylor (see comment [below,Ed]) I have friends and acquaintances who say they don't know how they found time for work. For many the reason is everything is done at a much slower pace than they did before. For others they find ways to fill they day but the stuff is pretty meaningless. There are some who do fill their day with meaningful and satifying endeavours but there are lots who don't.

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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