Many Australians are clear about what they are retiring from, but not clear about what they are retiring to.
They often feel that retirement is this new life phase that is an extended holiday or a 30-year-long weekend. In reality, retirement is a transition and it doesn’t happen overnight. Retirement today is also very different from the retirement our parents and grandparents experienced. With the assistance of global retirement expert Barry LaValley, we have outlined the most common misconceptions below.
You have no choice
Some people believe that they do not have any choice in what this phase of life will be. In fact, retirement is about choice and it does not need to be a complete lifestyle change. Take a step back and think about what you can choose. Choice to pay, choice to engage, choice to contribute, including how much time you want to spend not working.
Money = happiness
Yes, money does help, however, good health and a sense of wellness and purpose is more important. Most wealth advisers have witnessed people with relatively modest means achieve far more in terms of a positive sense of self and place in the world than people with much greater bank accounts. One of the things you find out quickly in retirement is that your success in daily life is now what you make it, not the money making it.
Retirement spending will be consistent throughout retirement
People tend to spend a great deal more in the first few years of retirement before settling into a pattern. As time goes on, spending tends to move more to family and health. Due to COVID, people are valuing things that they previously took for granted and they’re de-valuing things that they set as significant goals.
A life full of leisure must be a good thing
Consider the paradox of leisure: we like leisure because it is a break from work. If we had leisure seven days a week for 30 years, where is the break? So being busy doing something, other than leisure, is an important driver of retirement happiness. Working part-time, volunteering and helping others are all worthwhile ways to keep your days full and active. Episode 7 of Talking About Retirement speaks specifically about leisure and balance.
Retirement is a ‘couples’ issue
A typical retirement misconception is that retirement is an issue for aging couples. Many couples delegate financial management to the male, and yet the average age that a woman first becomes a widow in Australia (if she is going to be a widow) is 59. Sixty per cent of Australian women aged over 65 are single, widowed or divorced. It pays to make sure you both know where the money is, how it is managed and who is involved.
Retirement is a time to do new things
It is, but as we age, we have increased difficulty doing new things. Remember that generally, if you didn’t do something before retirement, you will be less likely to do it after retirement. Since the retired “you” is no different than the working “you”, ask yourself whether you are comfortable doing new things now. If not, you will have to create positive strategies to do new things rather than assuming that time is the only variable.
If you would like to hear more about the new age of retirement, our Capital Partners podcast Talking About Retirement with Damon Sugden is available to stream on your favourite podcast platform OR our website.