When should you retire?
The science of modern ageing is changing the answer to this question quickly. Learn about how superannuation supports early and late retirement and how to leverage it.
In this newsletter:
Feature Story: When should you retire?
From Bec’s Desk: Back on deck and needing your input into the Treasury Discussion Paper
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The Prime Time podcast: Happiness, marriage and mismatched expectations in retirement with bestselling author Joanna Nell
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When should you retire?
I went to see my GP this week, who is firmly in his 70s, and clearly sick of answering the question “When are you going to retire?” from his family and peers. In the midst of my appointment, knowing what I do for work, he asked me the big hairy question with a wry smile “When do you think people should retire Bec?”
And, being part-way through the writing of my next book for those in their late 40s, 50s and 60s right now, I knew exactly how I wanted to answer. And it’s not what most of you would expect for the author of How to Have an Epic Retirement.
I said, “I don’t think people should feel the need to retire fully ever - or at least not until they are well and truly ready. I think they should find work they love and do it as long as they love doing it and start to build out a lifestyle that might previously have been reserved for retirement while they work on things they love. And, once they finish doing paid work, they should find ways to use those skills in areas they are passionate about for much longer too. I think people who are deeply embedded in activities they enjoy, that stimulate them and keep them learning, live longer”.
“So, on that basis I think that we’re about to change the lingo on retirement,” I said. “I think most people in the next generations approaching retirement might instead choose to live out a long “Prime Time” which is what I’m calling the years leading up to retirement where you can increasingly have the best of both worlds - enjoyable amounts of work and time for health and leisure activities you want to pursue. Then you choose to retire fully when you aren’t getting as much joy from the work parts of your life anymore, or it doesn’t fit with your other goals and priorities like travelling and caring for loved ones.”
He liked that. But the poor doctor didn’t realise he’d signed on for a long lecture. I kept going!
“In fact, I’d rather people start to recognise now that they might live much longer lives than previous generations, so if they find themselves unfulfilled or unable to work in their career path (usually due to ageism or physical concerns) in their 50s or 60s they would get up and look for something different to work on instead of looking at retirement as the only way out. They should know they don't have to retire to find fulfilment, they can adapt the work they do, re-educate themselves, learn about new things, finding something else, launching down a different path, one they will enjoy more and that will give them meaning in the second half of their life. And they can gradually choose to fit more travel, family and lifestyle activities in alongside work, which does not have to be 38 hours a week anymore.
He smiled. “I think I agree with you! I don’t want to retire, I enjoy what I do too much,” he said.
Science on both health and happiness tells us that having meaning, purpose and a valuable community around us will help us live longer, better quality lives. Many people get all those things from their work. The RIGHT TYPES and the RIGHT BALANCE of work, family and friendships, functional exercise and healthy eating and buzz-filled holidays really do deliver on living well. So it’s time we acknowledged that, and instead of wishing away our work lives, recognising the enormous role paid work, or charitable work can play in what can become a ‘flexi-retirement’, a ‘part-time retirement’ or just ‘staying in your Prime Time as long as you want’.
The superannuation system is actually set up rather well to support you if you do want to work longer than average, or keep one foot in the workplace and one foot in your health, family and lifestyle for many years longer than expected of you.
You might think that superannuation is a system designed to support you when you give up work - but it’s more than that! It’s a system designed to support you as you ease back on work too. And we have a lot of work to do in this country to help people better understand their superannuation.
We actually have 4.3 million retirees in Australia right now, but only 1.3 million people have converted their superannuation into retirement phase accounts, most because they don’t understand super or fear running out of money. It’s worth understanding though. It’s an excellent system, designed to fund your life and lifestyle from somewhere around the age of 55 for today’s retirees if they want it, up to your end of life. To access your super, you have three options:
Fully retire between 55 and 65 (and maybe even go back to work later)
You can access your super once you reach preservation age (which varies based on your date of birth) and before you turn 65, by giving up work, and converting your superannuation into a retirement phase account or draw on it as a lump sum (but please get advice first). Your income from super will be tax free on the money earned in your retirement fund, which can be up to $1.9M per person. Be aware that you are then forced to draw down according to the minimum drawdown requirements. It is worth noting that you can retire fully and access your super, then go back to work later. If you do this your superannuation will remain in retirement phase, and you will be required to open an accumulation phase account to put your earnings into from your current work. It’s a bit tricky, but many many people have done this! Get some advice from your super fund when navigating it.
Keep working part time and access your super to fill the gap
This is what’s called a transition to retirement. If you have reached preservation age, and want to keep working, but work a bit less, and access your superannuation to top up the income gap, you can. You simply contact your superannuation fund and open a transition to retirement account, into which you can transfer some of your super balance, and have it sit alongside your accumulation account, into which your employer will keep paying your superannuation earned from working. It’s a great way to live a Prime Time life - and you can keep using your transition to retirement account right up until you turn 65, when access to your super becomes unrestricted.
Keep working and eventually gain access to it at 65, without giving up work
Once you reach 65, you can access your superannuation without any conditions of release. You just convert it into a retirement phase account or draw on it as a lump sum. If you are working, you can have an accumulation and a retirement phase account running with your super fund. You will want to get technical advice from a financial advisor or your super fund though.
The passion some people have for their work is palpable. You can feel it. It keeps them alive, keeps them interested in learning new things and keeps challenging them to grow. Other people have to leave the workplace to find the freedom to look for things that give them this much excitement. So there’s really no right or wrong answer on when you should retire. Just know, it’s not an irreversible decision, and the super system is actually well designed to help you have the best of both worlds.
I have so much more to say on this topic, but I’ll save it for the book!
Welcome to our thousands of new subscribers that joined us over the holidays! I hope you enjoy this newsletter as much as I enjoy making it.
I’m back from holidays and I feel very fresh. I had a quiet summery holiday near home, swimming at the beach, dining with family, taking out our little boat and reading books. It was magic. I hope you did too!
During the holidays you might have heard me on the radio - many thanks to the handful of national ABC radio shows that featured Epic Retirement and invited me for a chat. You’ll be hearing me more on the radio, with regular spots starting in ABC Southern Queensland Drive, and ABC NT Brekky too, where I have a regular spot called ‘retire like a rockstar’! Super fun!
And over the next few weeks I’ll be speaking at a few events - all around the country! I’ll let you know more as they pop up!
The year is coming back to pace and I have a few things to talk about, that I want to get you involved in.
The Epic Retirement Flagship Course
The Epic Retirement Flagship Course will be launching soon and I’ll be offering an amazing deal on our first course.
Launching our new online education program is no small feat! It’s made up of 100 videos, as well as quizzes, worksheets and tools. It’s delivered in 14 modules over 5 weeks (run synchronously - so we can learn from the community too). I’ll be kicking off our first course to a limited audience, and for the first one, because I’m going to ask you to provide detailed feedback and input all the way through to improve it, I’m going to be offering a huge discount. Register your details here to be notified of the opportunity to be one of our first course participants. The first course numbers will be capped so I can have a personal level of feedback on the program!
Be a part of our response to the Federal Treasury’s call for feedback on the Retirement Phase of Superannuation - take my survey here
In December, the Federal Government called for feedback with a discussion paper on the Retirement Phase of Superannuation. I think we should respond. We would love to hear your thoughts or feedback guiding our response to the Federal Government's call for input on the trajectory of the superannuation system. If you’re interested take the following short quiz, complete with some input fields that send us your insights and we'll put together a response. Let's build a voice of the pre-retirees in Australia that the government can hear. You can read the Treasury Discussion Paper here. And take the quiz here.
And finally, a little poll of the week, which I know you love.
That’s probably enough for the first working week of the year. So, until next week make it epic!
Many thanks! Bec Wilson
This week on the Prime Time Podcast we talk about the secrets to success in retirement as a couple when it really is a very personal and individual journey.
Joanna Nell is a doctor, an advocate for positive ageing and the author of five best-selling novels. Her latest book, 'Mrs.Winterbottom takes a gap year', is a heartwarming exploration of mismatched expectations in your Prime Time years and early retirement. And it reinforces some of the importance of living life in the moment.
When I read her book, I felt like I was reading a fiction version constructed on many of the lessons I talk about in ‘How to Have an Epic Retirement’. So chatting with Joanna about the process of approaching a modern retirement was fun indeed.
The idea and role of a ‘retirement gap year’, which can be a real time of reinvention, between one phase of life and the next. A gap year or a period of transition, seems like a terrific concept for early retirement, now that we are having a more active phase of life in retirement than ever before. A time to challenge ourselves and find out who we are for the next stage of our lives.
LISTEN HERE - LATEST EDITION (S1E11) - OMNY
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