The Australian Bureau of Statistics (ABS) has recently revealed data about a notable shift in retirement patterns for Australians. A large source of the findings relates to the upward trajectory in retirement age, especially for women, and how more Australians are choosing to stay in the workforce longer than ever before. Let’s delve into the key findings shaping the landscape of retirement advice in Australia.
A rise in Average Retirement Age:
The ABS data for 2020 indicates a significant change in the average age of retirement, which has increased by a year to 56.3 years. In the larger picture, this is signalling a shift in trend. Australians are opting for extended careers before embracing retirement.
Women’s Prolonged Workforce Participation:
A noteworthy aspect of this trend is the substantial increase in the average retirement age for women. From 2018 to 2020, women are now retiring at the age of 54, up from 52. This is a clear departure from traditional retirement age norms and reflects the growing trend of women staying actively engaged in the workforce.
Men’s Retirement Age Dynamics:
While the average retirement age for men decreased slightly from 59.5 years in 2018 to 59.3, the overall trend suggests a complex interplay of factors influencing retirement decisions among men.
Changing Perspectives on Retirement:
The conventional notion of retirement at 65 is transforming, with the average Australian intending to retire at that age. However, this intention contrasts with the actual retirement age, reflecting a desire among many to continue working beyond traditional retirement benchmarks.
Pension and Partner’s Income:
The ABS data underscores the pension’s continued significance as a primary income source for retirees. Interestingly, 34% of retired women rely on their partner’s income, emphasising the importance of financial independence for women in retirement.
What does this mean for your retirement plan?
The changing retirement landscape in Australia has several implications for if you are considering retirement or in the process of planning for retirement. Here are some key takeaways:
Extended Work-Life Expectancy:
If you are planning for retirement, there is a larger consideration of the potential for an extended work life. The consequences of this may involve reevaluating your retirement savings goals, investment strategies, and the anticipated duration of post-retirement financial support.
Redefining Retirement Age:
There is more common flexibility in the sentiment of retirement. The conventional retirement age of 65 is evolving, and it’s okay to opt for a later retirement based on personal preferences, health, and financial considerations. Your retirement plan should be flexible to accommodate any personal changes and preferences.
Gender-Specific Considerations:
Superannuation Planning for Women: The increase in the retirement age for women highlights the importance of tailored superannuation advice and planning. Initiatives such as contributing to super during paid parental leave can enhance financial security for women in retirement.
Health and Wellbeing in Retirement:
With a trend toward longer work lives, you can feel less pressure to leave the workforce entirely, instead opting to work part-time or engage in fulfilling activities post-retirement. Retirement plans should not only focus on financial aspects but also consider health, well-being, and opportunities for continued personal growth.
Pension and Income Sources:
Diverse Income Streams: As the pension remains a significant income source, retirees should assess their eligibility and plan for a mix of income streams. Diversification can include pensions, personal savings, and potentially continued part-time employment.
Regular Review of Retirement Plans:
Given the evolving retirement landscape, individuals should regularly assess and adapt their retirement plans. This includes reassessing financial goals, adjusting investment portfolios, and staying informed about changes in superannuation policies.
As Australia witnesses a larger cultural shift in retirement culture, the data presented by the ABS paints a better picture of the state of our evolving work-life patterns. If you have questions about how this may affect you or wish to discuss your retirement plan, contact us at (08) 9322 1882, email admin@lifefinancialplanners.com or visit our contact page. We’re ready to help you navigate your path to retirement.
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