Is working a fifth day each week worth it?

And in today's newspapers, 'Retirement is packed with choices: Here’s how to start'?

Oct 12, 2024

In this edition

Feature: Is working five days a week worth it? I do the numbers on how much your fifth day of work is really earning you

From Bec’s Desk: And we’re off!

SMH/TheAge: Preparing for retirement: Where do you start?

Prime Time: Your guide to Australia's most beautiful walks with Brett Godfrey

Is working a fifth day each week worth it?

It might seem bold to discuss working less during a cost-of-living crisis, but it’s a question many of us face at different points in our careers: is it worth working full-time if you’re already earning enough to live comfortably, or would cutting back to part-time give you a better work-life balance? While it’s tempting to think that working more automatically means living better, the reality is more nuanced.

With the new 2024/25 tax rates in place, it's time to crunch the numbers and see what you’re really bringing home for those extra fourth and fifth days. Spoiler alert: the financial benefit might be smaller than you think, especially when you factor in the value of your time, well-being, and lifestyle gains from having more days off.

What’s the real value of your extra workdays?

As your income increases, so do your tax obligations, meaning the extra income from those fourth and fifth days of work might not be adding as much to your take-home pay as you think. With the tax changes already in place for 2024/25, the top marginal tax rate of 30% kicks in at $45,001. For higher earners, this means a chunk of your extra pay is being handed over to the ATO.

Let’s break it down with some examples to see what’s really happening when you’re pushing through that full workweek, and explore the impact of removing your fifth workday, and maybe your fourth too.

It’s not just about the dollars – it’s about your quality of life. Do you want to keep grinding through five days a week when those last couple of days are taxed so heavily?

Example 1: Earning $100,000 a year

If you’re on a $100,000 salary, that’s roughly $1,923 a week before tax. Here’s what happens if you work full-time:

After tax and Medicare levy, your take-home pay would be about $77,212 or $1,484 a week.
If you drop to 4 days a week, your gross income reduces to $80,000 a year and your net income to $63,612. That brings your take-home pay down to $1,223 a week, losing you $261.
If you drop to 3 days per week, your gross income reduces to $60,000 a year and your net income to $50,012. The fourth day of the week is therefore earning you another $261.

So, working each extra day adds about $261 more per week or $13,600 per year after tax. Now, $261 a week might feel substantial, but it begs the question: is it worth the extra time, energy, and stress that comes with full-time work? For some, absolutely. For others, that extra time back could be invaluable.

The difference becomes much more significant at the higher tax levels - above the next threshold that kicks in at $135,001.

Example 2: Earning $200,000 a year

For those earning $200,000 a year, here’s how it plays out. Working full-time, your take-home pay after tax and the Medicare levy would be about $2,689 a week. If you drop to four days a week, reducing your salary to $160,000, your weekly take-home pay would be around $2,235, losing you $454 for the fifth day.

That’s a difference of $23,600 per year after tax–a bigger amount than our $100k example, but remember, at this salary level, a significant portion of your income is taxed at 30%, and then another big portion, from $135,001-190,000 is taxed at 37c in the dollar; and the last $10,000 is taxed at 45c - meaning those extra workdays might feel like a lot more effort for less reward.

When does full-time become "less worthwhile"?

The tipping point where full-time work starts to feel “less worth it” depends on your personal situation. For many, it’s when you’re pushing into the $135,000+ salary range, where higher tax rates begin to bite. If you’re earning upwards of $190,000 – the threshold for the top tax rate of 45c, you’ll notice the impact even more.

At those levels, working full-time means you’re putting in the same hours, but the actual take-home pay from those extra days is significantly reduced by tax. This is when you might start to question whether it’s time to switch to part-time.

Is part-time the smarter choice?

It’s not just about the dollars – it’s about your quality of life. Do you want to keep grinding through five days a week when those last couple of days are taxed so heavily? Or would you rather take back that time to focus on things that matter more to you—like family, hobbies, or simply avoiding burnout? Have you got an income stream from investments that could pick up the gap? Or can you trim your cost of living back by that after-tax amount?

For many people, especially as they approach retirement, going part-time offers a more balanced way to live without a dramatic financial drop. And if you’re earning $150,000 or more, going part-time might be the smarter way to stretch out your career without sacrificing your personal life.

In the end, it comes down to your priorities. Is that fifth day’s $13,600 or $23,600 a year worth the grind of full-time work? Or could you live a little more comfortably by scaling back your hours and focusing on what really matters? It’s worth doing the maths and deciding whether those extra workdays are giving you the return—both financially and personally—that you really want.

This next book is a monster! I’ve been powering through rewrites of each section, polishing, checking, smoothing out the sections and making it all flow. I’m getting excited. There’s only one small section left to write — so I’m on track. My editor is happy, I’m happy. And hopefully you’ll find this new perspective on modern Prime Time and pre-retirement refreshing and helpful, making you happy too. The cover design work has begun. This will be real before we know it. I’m a little bit excited.

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Next week, I’m hitting the road again, speaking at a few industry conferences and corporate events. I love talking about modern retirement—how it’s evolved and how the industry can help people navigate it; as well as talking to pre-retirees to educate. I’ll be in Noosa and Sydney, then heading over to Adelaide. Unfortunately, none of these events are public—they’re mostly educational sessions for financial advisers and super funds. But, I do have some exciting public events coming up, so keep an eye out!

One of the big exciting ones - I’ll actually be keynoting the Women in Super Christmas Event! Hundreds of women and their biggest supporters all in one place, celebrating the end of the year. Now that sounds like fun eh! Get your tickets!

And if you’d like more: I’m working up the courage for a book launch tour next year—something I’ve never done before! If you’re a business or community and you’d be keen to host an event on the tour, reach out. And if you’d be keen to come, give me an answer on the poll below.

Tell me where in the comments… and if you know a place we could hold them or want to support them - please reach out!

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I love the guest speaking and educating in person part of my work. It offers a direct contrast to sitting behind this computer educating in writing that gives the perfect balance. Want me to speak or educate somewhere? Email me.

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The Epic Retirement Flagship Course for Summer kicked off this week, and we've had so many wonderful participants register! They’re already diving into the week one videos and jumping into conversations in the Community Zone with excitement. This is exactly why I don’t offer the program on-demand—it’s the power of shared experiences. Hearing others’ fears, issues, and how they’re navigating their own retirement journeys adds so much value as you go through the process together. And you get all that AS WELL as the lessons and the workbook and the live Q&As… I’m excited for the weekly events to kick off Monday! I love them!

Anyway, if you haven’t signed on and you wish you had, I can still squish you in before the first live event Monday night, without you having missed anything. Register here with the code PRIMESUMMER24 for a 15% discount.

Or you can register your interest for our February program in 2025 on the website here.

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And I’m loving going on radio in regular spots. I just started a new regular spot chatting with Sofie Formica on 4BC on Tuesday afternoons. Have a listen. She’s terrific.

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Anyway - that’s enough words - gotta save a few for the book. Don’t forget to send me your letters! I love them. Please, send them to bec@epicretirement.com.au.

Many thanks! Bec Wilson

Author, podcast host, columnist, retirement educator, and guest speaker

Retirement is packed with choices: heres how to start

Extract of article published in print in The Age, The Sydney Morning Herald, Brisbane Times, WA Today on Sunday 13th October 2024.

Retirement is a funny time of life. Some people can’t wait for it, while others push it to the back of their minds, thinking they’ll plan for it later.

Until recently, many people didn’t give it much thought until they suddenly realised they wanted their retirement to be different from previous generations. They wanted it to be epic – and that takes some preparation.

Every year, about 120,000 people retire in Australia, and that number will grow as the last of the Baby Boomers decide that they want to stop working. But how do you prepare for it?

Despite what some might claim, you can’t just walk into a financial adviser’s office and expect them to “plan your retirement for you”. There’s a lot more to it. Modern retirement is packed with choices, many of which you’ve never had to navigate before.

Think about it: almost everything in your life changes during retirement. What you do with your time, where your money comes from, how you spend it, where you find fulfilment, and where you find a sense of belonging.

With so much change, it’s surprising that most conversations still only focus on financial planning. Meanwhile, your body is changing, and you have to make important choices about how to manage and proactively support that as you age.

So, where do you start?

Preparing for retirement isn’t just about saving enough money—it’s about envisioning the life you want.

First, build a vision of what your life ahead might look like. Now, I hate to get all woo-woo on you, but this step is crucial, and depending on your age when you start planning, this can be quite challenging.

This article continues: read on, in The Age, The Sydney Morning Herald, Brisbane Times and WA Today.

Your guide to Australia's most beautiful walks with Brett Godfrey

Australia is home to some of the world’s most breathtaking walking trails and multi-day hikes. It’s high time we started exploring our own backyard and embracing the great outdoors right here at home. In this episode, I chat with Brett Godfrey, someone you might remember as the co-founder of Virgin Australia, alongside Richard Branson. He’s now the co-owner of the Tasmanian Walking Company, and we’re talking about the incredible walks on offer in Tassie and beyond, and how you can make walking trips one of your own Prime Time challenges.

LISTEN TO THIS EPISODE OF THE PODCAST HERE:

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Last of all, if you haven’t read the book, you can order your copy from Amazon online and Big W online too. Or pick up a copy at your local Big W, or QBD stores.