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5 things nobody tells you about retirement

Retirement  |  27/03/2017  |   5 min read

The conversations around retirement tend to focus on money – will you have enough, will it last? While financial security is important, there’s more to retirement than just your bank balance. Which is why we’ve highlighted some of the other factors you should consider.

You can hear more about retirement, and how to prepare by attending an Equip Retirement Ready expo in your city. Please click here for more info.

In the meantime, here’s 5 things nobody tells you about retirement.

Your relationship with your partner or spouse may change

Most couples settle into a routine during their working years, and may only see each other in the evenings or on weekends. Retiring often removes that buffer, and you can suddenly find yourself spending a lot more time together. That can take some adjustment.

As Psychologist Robert Bornstein, author of How to Age in Place, explains, "Retirement is a major stressor on relationships, because people are so preoccupied with setting up the financial bedrock of retirement that they don't think about interpersonal challenges. They don't think about the lifestyle change.”

“Part of the problem is they may go from being together two or three hours a day to being together 24/7. And it happens all at once. Even if you love this person dearly, you are not used to being that close all the time. You have to plan for it," he says.

You realise how much of your identity was tied to your job

If you’ve spent the majority of your working life in a specific job or profession it can become a part of your identity. Whether that’s Jane the accountant or John the baker, our jobs have a way of defining us, and when we lose that it can be hard to find a meaningful replacement.

Thinking about retirement as a chance to start a new chapter in your life, rather than the close of your working life can help ease the transition.

According to Carolee Duckworth, co-author of Work After Retirement, “As you let go of what you were before, then figure out and focus on what you want to do next — paid job, volunteer work, hobbies, other interests, or some combination — you will enter what can be the most meaningful, creative and fruitful time of your life.

You suddenly have a lot of time on your hands

While most people look forward to retirement and all the spare time that it promises, finding meaningful ways to fill your days can be more difficult than people realise.

Part time work and volunteering are two of the more popular ways to fill the week, and when combined with sports and social activities can help provide a sense of purpose and identity. Other people take up teaching, pursue an interest in art, or retreat to the garage to work on a pet project.

At the end of the day, it’s your retirement, and you’ve earned the right to spend it however you want, but studies have shown that keeping active and engaged in retirement can boost both your physical and mental health.

Your health becomes a priority

Free of the daily grind, many retirees turn their attention to health. In the process, they often find themselves in better shape than they’ve enjoyed for years, or even decades.

According to a study Published in the Journal of Preventative Medicine, retirement often brings with it a range of positive lifestyle changes. “Compared with people who were still working, retirees had increased physically activity levels, reduced sitting time, were less likely to smoke, and had healthier sleep patterns,” said lead researcher Dr Melody Ding.

“A major life change like retirement creates a great window of opportunity to make positive lifestyle changes - it's a chance to get rid of bad routines and engineer new, healthier behaviours.”

Your money can keep growing

When you’re approaching retirement your superannuation balance tends takes on new significance. But the reality is your final balance is less important than how long your money will last. And a combination of investment earnings, and age pension payments, can help    stretch even a modest balance.

Here’s an example using Equip’s Retirement Calculator. If you retire at 65 with $500,000 in superannuation savings and want to draw down $50,000 per annum in living expenses, you might expect your savings to last 10 years: $50,000 x 10 = $500,000 (assuming no negative returns or fees).

But as the calculator demonstrates, your super won’t be totally depleted until you’re aged 82. That’s 17 years. Thanks to a combination of investment earnings on your balance, and government age pension supplements, the draw down rate tends to be far more gradual.

Based on the above examples, at age 75 you can expect to be drawing down approximately $22,000 in Age Pension payments and $28,000 from your suerannuation pension for a combined income of $50,000. This is based on a number of assumptions, including your investment strategy, Age Pension eligibility, assets owned, and inflation rate, but it demonstrates the nuances of super in retirement.*

You can input your own numbers and compare your super’s run out age using the same Equip retirement Calculator.

What should I do next?

If you’re approaching retirement and starting to think about the issues outlined above please join Equip at one of our upcoming Retirement Ready Expos. You’ll be able to speak with financial planners and Centrelink representatives, hear from industry professionals, and find out more about volunteer programs in your neighbourhood.

Attendance is free and everyone is welcome. Click here for more info.
 


* This example assumes a net earning rate of  5.1%, the maximum Age Pension benefit, and a pension product environment (meaning earnings are tax free).

Disclaimer- This information is provided for general information only. It does not take into account your personal objectives, financial situation or needs and should therefore not be taken as personal advice. You should consider whether it is appropriate for you before acting on it and, if necessary, you should seek professional financial advice. Before making a decision to invest in the Equipsuper Superannuation Fund, you should read the relevant Equip Product Disclosure Statement (PDS). Past performance is not an indication of future performance. Issued by Equipsuper Pty Ltd ABN 64 006 964 049 AFSL 246383.

Check your retirement income with the Equip calculator