We are now entering a peak retirement time of the year, with many retiring Australians aiming to have their last day in the paid workforce around about this time of the year.
In practice, many imminent retirees choose to actually retire sometime in the first quarter of a new financial year rather than as close to June 30 as practically possible.
Perhaps after receiving professional advice given their personal circumstances, some chose to delay retirement until the new financial year to make the most of the personal $18,200 tax-free threshold, among other reasons.
And more of us are deciding not to stop full-time work one day and begin full-time retirement the next but to ease into retirement by reducing our workload – perhaps taking a transition-to-retirement super pension.
Certainly, many of us would have a favoured date and age for retirement or for reducing our workload. Yet in reality, our timing for leaving the workforce may be dictated by circumstances largely or fully beyond our control.
Online investment newsletter Cuffelinks has published an article that captures the uncertainty that can engulf decisions to retire.
In this article, Retirement catches most people unplanned, editor Graham Hand, quotes a research paper, Work, money, lifestyle: Plans of Australian retirees, by academics Julie Agnew, Hazel Bateman and Susan Thorp*.
The study aims to provide a snapshot of the "retirement planning, expectations and realisations"; based on a survey of 920 Australians aged 50-74.
The survey indicates that most pre-retirees expected to decide for themselves when they will stop paid work, however responses of the already-retired show that the decision is often made for them.
Just 40 per cent of the already-retired had decided their own retirement data while the "remaining 60 per cent were either forced or nudged out of the workplace".
Among the main reasons for people to leave work at a date not of their choosing include poor personal health, poor health of other family members, difficult working conditions and an inability to get work.
A key message arising from this research is that it is critical to plan for both retirement and for dealing with unexpected factors that may force you to leave the paid workforce at a date not of your choosing.
Being prepared for the unexpected is a crucial part of sound financial planning.
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Robin Bowerman is Head of Market Strategy and Communication, Vanguard Australia. As a renowned market commentator and editor Robin has spent more than two decades writing about all things investment. |
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