Know when to change gear: judging the right time for retirement

Actively planning for retirement helps counter the loss of identity, income and status that can accompany the exit from the workforce.

The decision to retire is a personal one that’s often as much about your purpose for working as it is about your finances. We look at the signs that it could be time to move on, as well as how to plan for a successful retirement.

For Keith Yeo FCPA, the decision to retire was surprisingly easy. Three health scares over the course of a year were a wake-up call for Yeo, who realised that work was affecting his health. At 61, he recognised it was time to pull up stumps after two decades as the director of corporate services and CFO of Banyule City Council in Melbourne.

“I was prepared to walk away from a high-paying job because, at the end of the day, I felt my health was worth more than any job,” says Yeo, now 64. “I’ve never regretted doing that.”

Signs you should retire

One of the most obvious factors to consider before retirement is financial security. According to the ASFA Retirement Standard, a single person requires A$545,000 and a couple A$640,000 in superannuation to retire comfortably – but most Australians retire with much less. The average superannuation balances at the time of retirement in 2015-2016 were A$270,710 for men and A$157,050 for women.

Like Yeo, many older workers retire due to declining health – physical or mental. Another common reason to retire is caregiving, which is often incompatible with work. A survey carried out as part of the 2017 Work, Care, Health and Retirement project by the Centre for Workplace Excellence (CWeX) found that one in five caregivers reported giving up work due to their caring responsibilities, with few expecting to return to the workforce.

The decision to retire often requires a degree of soul searching. It’s an unpleasant reality, but cognitive skills often decline with age, even if we don’t notice it. If a worker’s cognitive function is not up to the task, retirement should be considered.

Related: Reluctant retirees – why some people find retiring hard to do

Finally, if the thought of going to work no longer gets you out of bed in the morning, it might be time for something new. Work can become unenjoyable for a range of reasons, whether it’s stress, the physical demands of a role or, unfortunately, ageism in the workplace. The CWeX report found that older workers are often subject to negative comments and are overlooked for promotions and learning and training opportunities.

Develop a retirement plan

Actively planning for retirement helps counter the loss of identity, income and status that can accompany the exit from the workforce.

Yeo believes that everyone should sit down during their 50s and create a plan that extends into retirement

“At that age, you can look back and see what’s happened in your life, but you’ve still got plenty of time in the workforce, subject to health, going forward,” he says.

A retirement plan is necessary even if you’re determined to continue working past 65. Some people might genuinely love working, but if work is your whole life, says Yeo, “when you retire … you could go into depression or drive your partner mad and finish up divorced”.

Transition to retirement

In an ideal world, a worker can transition into retirement on their own terms – but for most, involuntary retirement is a fact of life. A good plan should factor in a range of scenarios – however unpleasant – that could affect your work life in the years ahead, such as illness, loss of a partner, or retrenchment.

At the height of the global financial crisis, Peter Barber was retrenched from his role at an international company. At 58, he wasn’t ready to stop working but, having been pushed out of the corporate world, he found it impossible to get back in. 

Ageism is a real discriminator in the world today, particularly in the recruitment industry,” he says. 

“As soon as they see that you’re over 55, you know you’re not going to get the job.”

Retrenchment forced Barber to face up to the reality of retirement. 

"... if the thought of going to work no longer gets you out of bed in the morning, it might be time for something new."

“I had the benefit of a long transition between 55 and 65 where I was able to get my financial house in order and choose what I wanted to do,” he says.

In 2016, Barber called on his skills and experience to develop Follow Your Star, a program designed to help people create plans for different stages of their lives, including retirement.

Barber helps his clients to create a purpose statement, identify their values and drivers and set strategic goals over a three-year period as they transition out of work.

Most retirement planning focuses on mapping out a person’s financial future over how they are going to find meaning in life. 

“The question should be around the other way,” says Barber. “‘What do I want to do? And then, how do I fund that?’”

What retirement looks like in the 21st century

Retirement does not have to mean a monotonous routine of golf and gardening. With appropriate planning, the post-work phase can be a rewarding one that is tailored to individual needs.

Semi-retirement: Many workers are choosing to scale back work commitments through taking on part-time or freelance work, consulting or mentoring.

Volunteering and philanthropy: According to the learn-earn-serve model, retirement is an ideal time to give back to the community. Yeo is a member of CPA Third Age Network (TAN) committee, while Barber’s charitable work centres around addressing homelessness, a major issue in his home town of Melbourne.

Study: Many use the free time of retirement to go back to school, whether through formal study at university, or short courses offered by U3A (University of the Third Age) and other adult education institutions.

Read next: Is ‘refirement’ the new retirement?

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