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Financial planners ask - have we got retirement all wrong?

Thursday, 19 September 2013 10:20

Too many people are retiring not because they can no longer do their job, but because society has decided that somewhere around 65, you should be put out to pasture. These reluctant retirees often end up bored and unhappy. Why do we try to force people to cease work at 65 if they’d like to work longer?

Whilst many Australians enjoy a happy and active retirement, Paul Benson - principal financial planner at Guidance Financial Services - recently 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 Mr 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’”.

“Once upon a time,” Paul continues, “we did manual work, and so our bodies wore out; thus in our latter years it was not an option to continue working - today, however, few of the jobs Australians are engage in require hard physical labour anymore.”

Indeed, 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.

“Most of us now in the work force should expect to live into our 90s,” Mr Benson points out. “On this basis, perhaps the Age Pension should kick in at 88?”

Guidance Financial Services recently surveyed their clients regarding 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.

But why - Benson and Global Financial Services ask - why do we put off things such as travel or pursuing a new hobby until we retire, and then run the risk of health issues preventing us from doing them – or worse; that we really enjoy it and wish we’d started 20 years earlier?

And they may have an answer: employment flexibility seems to be what is lacking. Why do we have to work 5 days a week and have 4 weeks leave a year? Perhaps once the mortgage is under control and the kids off our hands, reducing our hours or days of work, or having 6 or 8 weeks annual leave is what we want. Instead of waiting until retirement to play weekly golf, why not take Wednesday mornings off each week and start playing weekly golf at 50. Instead of waiting until retirement to buy the caravan and travel around Australia, why not take 8 or 12 weeks off and do it at 45? You might even be able to take the kids and have a memorable family experience. Interestingly, often self-employed people do make this choice. What a pity it’s not a possibility for more of our community.

Work is about more than money – it is about social connections, self-worth, mental stimulation and challenge. Somehow we’ve gotten it into our collective psyche that the expectation is (for males at least) to work 40+ hours a week from our early 20s until 65, then cease work altogether (cold turkey?) and enjoy caravanning and playing golf for about 10 years, until health issues slow us down.

According to Paul – “This is dumb!”

Why not work through to 75 if we’re fit and well, but work 3 or 4 days per week? In this regard women seem to have worked things out better. It seems to be far more socially acceptable for a woman to work part time than for a man. This thinking needs to change.

“Our thinking on retirement is outdated,” Paul says. “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.”


Mr Paul Benson
Financial Planner – Principal
Guidance Financial Services Pty Ltd
03 9870 6544, 0421 000 704
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