Who wants to work into retirement?


You’ve earned the right to put your feet up or choose what you want to do in retirement. So why are people saying keep working?

Key Points


  • The average age of retirement in Australia is currently around age 62-65, with women tending to retire one to three years before men
  • The main reasons people go back to work or continue working are financial necessity and boredom
  • Working can benefit physical and mental health and financial situation

Who’s still working after age 55? According to SuperGuide, the latest figures from the Australian Bureau of Statistics (ABS) show there were 3.9 million retirees in Australia in 2018/19, with 55% of all people age 55 and over retired. This was up from 53% in 2016/17.

In 2018/19, half a million Aussies who were not yet retired told the ABS they intended to leave the workforce and retire within five years.

According to the final report from the government’s 2020 Retirement Income Review, the average age of retirement in Australia is currently around age 62-65, with women tending to retire one to three years before men.

However, many people are choosing to stay in the workforce to older ages or go back to work in retirement. According to ABS data, the main reasons people do that are financial necessity and boredom.

Will you ever retire?


Compared to other countries, the mature age (55-64 year old) labour force participation rate of Australians (64.6%) is above average for countries tracked by the OECD. However, our rate of older workers is well below similar developed countries such as Germany (71.4%), New Zealand (76.9), Japan (77%) and Sweden (78.4%). 

These countries all have higher percentages of older workers remaining in their workforce. The US (61%) and Canada (64.6%) have a lower percentage of older workers.

The RIR Final Report argued improved health outcomes, greater workplace flexibility and higher average levels of educational attainment had contributed to many Aussies staying in the workforce to older ages and anticipated this trend was likely to continue.

Deciding to retire, however, isn’t always your own decision. 

Many people are forced to retire involuntarily due to ill health, job-related issues and caring responsibilities. It noted ABS surveys had found 28% of Australians retired involuntarily before age 65 and 8% after this age.

Retirement satisfaction


Last year, researchers at The University of Western Australia’s Life Course Centre found strong evidence retirement improved people’s overall life satisfaction. This was due to improvements in a retiree’s satisfaction with their financial situation, free time, health and participation in local community activities.

The initial burst of satisfaction tends to be short-lived, however. The researchers found satisfaction fades after the first three years. Improvements in your financial satisfaction on retiring tend to occur only among low-income individuals.

Unfortunately, not everyone enjoys better health after they retire. Researchers noted on-time retirement – compared with working beyond retirement – was associated with a higher risk of mortality. They argued retirees are such a diverse group in terms of their employment and life circumstances that what happens to you in retirement is different for different people and often depends on what you do before and after leaving work.

These different experiences are mirrored in recent data from the ABS, which found only 42% of Aussies aged 65 and over rate their own health as excellent or very good.

Mental decline in retirement


The changes brought on by retirement are not just about your physical health. For some people, retirement leads to a deterioration in mental health and happiness, while others find a new lease on life.

Impact of working in retirement


Delaying your retirement a few years can also be financially beneficial. If you are aged 55 or over and still working, you can consider taking advantage of the benefits offered by a transition-to-retirement pension (TTR or TRIS). This type of pension allows you to supplement your salary with money you withdraw from your super once you reach your preservation age. You pay no tax on your super pension after age 60 and your employer continues to top up your super.

You also have the opportunity to take advantage of the government’s Work Bonus. This fortnightly payment of $300 is an incentive to keep people in the workforce and is not counted towards the Age Pension income test.

Deciding whether to delay retirement or return to work


There are a variety of reasons to consider when it comes to either deciding your retirement date, or even whether or not to return to work. Here’s some things to consider:

Delaying your retirement

Advantages

  • Helps maintain your identity
  • Allows you to continue challenging yourself
  • Second chance to take advantage of employment-based opportunities
  • Allows you to maintain contact with colleagues you like
  • Employment benefits (such as private health insurance, company vehicle) continue
  • Helps keep your body and mind active
  • Can be financially beneficial

Disadvantages

  • Shortens your time in retirement
  • Can lead to health issues if you have a physically demanding or stressful job
  • May create family problems if your partner has different retirement expectations
  • Could prevent younger people from career advancement

Returning to the workforce

Advantages

  • Provides opportunities to try a new line of work
  • Helps stave off boredom and loneliness in retirement
  • Boosts your finances if the Age Pension or super savings are insufficient
  • Returns a sense of structure and routine to your life

Disadvantages

  • Could push you into a higher tax bracket
  • Re-adapting to working life due to new systems, technology or people may be difficult
  • May be difficult to secure a similar role to the one from which you retired

Source: SuperGuide.