MEDIA RELEASE: The runway to retirement is shorter than many Australians anticipate, and too few are taking control of the process, according to the latest report by Fidelity International into retirement planning.
In its report, New Life Old Life, Fidelity surveyed Australians* aged over 45 to explore when they planned to retire, what they thought retirement looks like, and how they are preparing for this phase of their lives.
Richard Dinham, head of client solutions and retirement at Fidelity, said that less than half of Australians surveyed are making an active decision about the end of their career.
“Most of us put lots of energy into building our careers, but not necessarily the inevitable wind-down phase of our working life.
This is particularly surprising because most of us say we want to transition into retirement, and the evidence shows that actively planning for this phase of our lives makes the transition more successful.
It’s therefore concerning that many Australians are going to find the start of their retirement years more stressful and difficult than they expected, or than it needs to be.”
The research also shows most older Australians want to work longer than previous generations did.
“The events of the past few years have made it easier to people to continue working – a tight labour market coupled with more flexible working arrangement such as working from home means that older Australians may have more choice and opportunity in how they work,” says Mr Dinham.
“In addition, there is a unique mix of factors that are currently providing opportunities for older knowledge workers. Since the start of the pandemic, Australia’s strict border controls have seen a negative net overseas migration. These new ways of working present an opportunity for older Australians in the workforce, especially those with higher education or skill backgrounds.
But, despite these opportunities and good intentions, most older Australians are not actively planning for the final chapters of their working life.”
A crucial issue is the study found that the runway to retirement is shorter than expected – most of us don’t work for as long as we intend to. Sometimes the reasons are out of our control; sometimes, they’re not. The outcome is that many Australians are retiring before they planned to, or before they expected to, which can cause both emotional and financial stress,” Mr Dinham says.
According to Fidelity’s study, the average age at which Australians plan to reduce their work commitments and transition into retirement is 62.5 years, and the average age they would like to retire fully is 64.8 years.
However, in reality the average age at which Australians start reducing their work commitments is 61.4 years, and the average age they fully retire is 63.4 years.
The top three reasons for retiring earlier than planned were that they were suffering from personal health issues (two in five), they were required to care for someone suffering from health issues (one in eight), or they were made redundant and lost their job (one in eight).
Mr Dinham says that this gap between planning and reality is making people feel out of control when it comes to retirement planning.
“A key driver of a positive emotional experience at retirement is a sense of control in the decision; however one in four retirees report feeling out of control at retirement.
Those who felt completely in control of when they stopped working full time had an overwhelmingly positive emotional experience – nine in 10 experienced positive emotions, and only one in 10 experienced negative emotions.
But those who didn’t perceive they had a choice in when they stopped full-time work had a terrible time. Seven in 10 of those who felt completely out of control experienced negative emotions when they stopped full-time work, and less than one in two experienced positive emotions.”
Whatever the conditions that bring about our retirement, there are things we can do to prepare and improve our circumstances – and, more importantly, our quality of life in retirement,” says Mr Dinham.
