Seven out of 10 Aussies can retire sooner than they think: expert

COVID crises and oft-repeated claims that you need million-dollar super stashes are causing many Australians to rethink their retirement age.

Add in the stretching of the Age Pension eligibility age, currently 66.5 years but moving to 67 years in July 2023, and more Aussies are opting to work longer out of fear their nest egg is or will be inadequate.

YourLifeChoices 2021 Insights survey, which drew more than 7000 responses, found that 46.97 per cent of respondents planned to retire after the age of 70 while another 16.37 per cent said they never planned to retire. This was despite the fact that 86 per cent of the 4000-plus retirees who responded said they were confident retirees.

So working for longer breeds confidence?

A 2020 Colonial First State survey of 1000 people found that 45 per cent of Australians did not feel financially confident about retiring and 23 per cent aged 30 to 65 said they would delay retirement because of the pandemic.

Are they ill-informed? Yes, according to Cameron Dickson, managing director of The Moreton Group.

Read: COVID to delay retirement

He says scaremongering about how much superannuation you need to retire, and out-of-date predictions about the best age to retire is causing many Australians to think they have to work for longer than they actually do.

Seven out of 10 people aged over 55 who visited his company could retire sooner than they thought, he says.

“Predictions about how much super you’ll need to retire will be completely irrelevant if they aren’t calculated for your situation and lifestyle.”

Mr Dickson argues that retirement calculators provide an overly simplified formula without a deep or informed analysis of an individual’s present and future position based on financial, health and life scenarios.

“They perpetuate a myth that Australians can’t afford to retire and exacerbate anxiety in a huge proportion of working Australians looking to change their lifestyles from work to retirement in the next five to 10 years.”

Read: Why an ageing population is an asset

He says many near-retirees don’t know what’s possible and don’t realise they can retire on a hybrid-financial model, using their super and government entitlements to enhance their quality of life or bring retirement forward.

“While it may seem complex and difficult to navigate, opening up all financial avenues can help Australians realise their dream of retirement sooner.”

Mr Dickson says people shouldn’t wait for a health scare to think about retirement planning and that they need to start the retirement conversation earlier so they can plan better.

“Discussing your income and how much money you have in the bank doesn’t come easy to Australians,” he says, adding that many Australians respect humility and therefore don’t talk about how comfortable they are financially, “particularly when there are frequent reports of working Australians not having enough savings to retire”.

“Those who feel they have too little money often find the discussion to be embarrassing.

“This awkward silence only intensifies the general anxiety in the community and a lot of people don’t seek advice and end up making decisions based on what they read online.”

Read: How a marriage needs to adapt when a spouse retires

Mr Dickson says people should think in reverse.

“Stop worrying about what age you should retire at and how much money you have in super, the first step is to find out what’s possible.

“If you plan what you want to do and work backwards, you will probably find you have enough money to retire earlier than you think. People should think about what’s possible first.”

The ‘golden years’ mean different things to different people, he says. Planning for retirement should therefore be a unique, personalised endeavour.

“Retirement is something that almost all working Australians dream about but very few actually have a retirement game plan – or exit strategy – because they don’t know what’s possible.

“We all need to start having the conversation.”

Have you decided to delay your retirement? Do you have a plan? Does it make sense to ‘work backwards’ as suggested? Why not share your experience in the comments section below?

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Written by Janelle Ward