Career planning has become an important and unexpected consideration when preparing for retirement, says Professor Joanne Earl of the Center for Ageing, Cognition and Wellbeing.
Most people only think about whether they will have enough to live on when planning for retirement, but ongoing research suggests we should take a three-pronged approach that also covers our health and career planning.
The decision to retire should be thoroughly investigated, says Professor Joanne Earl.
Professor Joanne Earl, from the Center for Aging, Cognition and Wellbeing (CACW) at Macquarie University, has studied the subject for 15 years and will give a public lecture on a more holistic approach to retirement planning on March 31.
“The reality is that many people will leave the workforce planning to retire and then find themselves forced to return out of financial necessity or boredom,” Earl says.
“Coming back may not be as easy as you think, as ageism is a common problem for older people looking to re-employ themselves.
“On top of that, your situation has changed and if you are forced to return to work, you may not feel the same way about your job. Even if you loved him before, there might be some resentment to deal with.
One in five people take early retirement
She says health also has a big influence on how we can spend our retirement, so we need to ask ourselves questions such as whether we will be well enough to do what we have planned, and whether we want to work longer, if our health will be good enough to allow this.
About 20% of Australians are forced into early retirement for health reasons, and it’s a figure that shocks many people.
We’ve added career advice to the program, so participants can properly consider options like retraining.
Earl and his team collaborated on an Australian Research Council liaison program with researchers from the University of Western Australia and the University of NSW, program sponsor Allianz Retire+ and partner Terry White Chemists .
The program includes a large-scale study where participants undertake a health assessment, sessions with career and financial advisors and a number of e-learning modules, followed by an assessment component.
Retrain even in retirement
Key goals were refined along the way, with career planning added after a separate study of when physicians choose to leave the workforce.
“Doctors tend to delay retirement for two main reasons,” Earl explains. “They think they haven’t saved enough money, and their identity is closely tied to being a doctor. If he is no longer a doctor, who will he be?
“With this in mind and the possibility of having to return to work, we have added career advice to the program, so that participants can properly consider options such as retraining, continuing education or developing new networks to help secure their work options.
“We get them to think broadly about their options, before determining what is possible from a health perspective. Some people then look to see if they could work part-time instead of retiring, and find other ways to generate income, perhaps adjusting their health to stay on the job longer.
Most underestimate monetary needs
Even on the best-understood aspect of financial planning, Earl says people often dramatically underestimate how much they’ll need for retirement — and how long their retirement pension will last.
Variables: If you plan to take a vacation around the world, it will require a different level of retirement income, says Professor Earl.
Information from the Australian Bureau of Statistics shows that a government pension remains the main source of income for most retirees. In 2018-2019, only 30% of retired men aged over 45 and 17% of women cited retirement as their main source of income; figures for women were skewed by the fact that some had no personal income. On average, Australian women finish their jobs with 23% less retirement pensions than men due to being out of the labor market for parental and care leave, which has serious implications for their finances in retirement.
Another challenge is the range of variables that influence how much each person needs to live comfortably, where they want to live, and whether they own their own home versus lifestyle expectations.
“If you don’t own your home, you have to factor in rent, and that’s something that isn’t included by some of the popular ‘comfortable income’ calculators used to calculate retirement needs” , said Earl.
You’re probably facing the biggest stash of money you’ve ever seen, and you might be thinking, “Oh, I’ve got a lot of money!.
“But if you plan to continue renting during your retirement, it could still be a considerable expense.
“Equally, if you plan to take a holiday around the world, it will require a different level of retirement income than an occasional week at a caravan park, cooking your own meals over the campfire.
“These miscalculations are understandable, because looking at your awesome account, you’re probably facing the biggest pool of money you’ve ever seen, and you might think, ‘Oh, I’ve got a lot of money! will go.’
“But the reality for some people could be very different, especially if they’re retired longer than expected or have unexpected expenses.”
Do thorough research before quitting
After an initial trial in 2021 involving 113 people aged 50 and over in Adelaide, the scheme has now rolled out along the east coast, with 700 participants from Queensland to Tasmania.
Big decision: Professor Earl says people considering retirement should do a thorough investigation before deciding to quit their job.
After the interviews, assessments and online modules are completed, researchers ask questions such as whether the person’s retirement plans have changed, whether they have reviewed their super balance and started contributing, whether they are better able to understand complex financial information, whether they sought further advice and whether they continued to use the information they received, for example by visiting the doctor more regularly or taking further training.
Results are about to be published for the Adelaide trial, with results from the East Coast study expected later this year.
“After participating in the study, a lot of people say, ‘I hadn’t even thought about it,'” Earl says.
“Decisions about when and how to leave work are very personal. We’re not advocating that everyone needs to work longer, just that they investigate more thoroughly before they leave.
“We just want people to make a more considered decision and have all the facts when planning for retirement.
“It’s never too late to start planning for retirement – and it’s also important to continue planning during retirement. Most retirement plans are never a “set and forget” proposition.
Retreat: Not just the Monday conference will take place at the Australian Hearing Hub on March 31, 5:30-6:30 p.m.
Register for free here.
Professor Joanne Earl is a Professor in the School of Psychological Sciences at Macquarie University and the Center for Aging, Cognition and Wellbeing.