Pitfalls to avoid if you are forced to retire early

So retirement is creeping up on you or perhaps you were forced to retire early due to changes in your workplace or health. What’s next?

The key thing you must avoid is doing nothing. As tempting as it might be to take time out to chill after you’ve hung up your hat, this could lead you in a destination you don’t want to arrive at – loneliness.

A study by the Institute of Economic Affairs found that the chance of developing depression climbs by 40 per cent when someone who is used to being around people at work or socially suddenly stops work.

By all means, set aside time for ‘you’ – after all, you’ve been working for years and deserve a break – but make sure the respite is part of a larger plan. That plan may include ways to continue making some money, regardless of whether you qualify for the Age Pension or not, plus activities several times a week that will get you out of the house and mixing.

According to personal finance site WiseBread, your plan should incorporate some of the following:

  • live relatively modestly and save
  • build financial roadmaps so you can budget for spending goals
  • if you have the resources, buy an investment property and earn passive income by way of rent
  • go back to studying and learn new, relevant skills
  • now that you have the time, devote some to building stronger relationships with family and friends
  • adopt and nurture a new passion or hobby
  • reach out to charities who need volunteers
  • and, importantly, travel.

At the top of the list, of course, should be investigating your income entitlements. If you are not yet of retirement age, you may qualify for the Newstart Allowance and some concessions on bills.

If you have reached retirement age, investigate how to access your superannuation to see if you are eligible for a full or part Age Pension.

Next, book appointments with your accountant or financial planner, a senior member at your bank branch and a Financial Information Service officer at Centrelink. These professionals will be able to answer your questions about entitlements plus give you tips on how to manage your finances going forward.

The Department of Human Services has more information for those looking at an abrupt retirement. To contact a Financial Information Service officer, call 132 300.

What tips do you have for anyone facing an early retirement? How busy do you have to stay to avoid becoming bored and lonely when you stop working?

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances

Written by Olga Galacho

RELATED LINKS

Thinking about retiring? Use this checklist to see if you’re really ready

Are you thinking about retiring soon? Here's a checklist to help you decide if you're ready.

The five golden rules of preparing for retirement

Are you ready to retire? Leon discusses the five golden rules of retirement preparation.

Are you ready to retire early?

Early retirement is the dream held by many, but realised by few.



SPONSORED LINKS

LOADING MORE ARTICLE...