Creating a flexible retirement.

Retirement
3 July 2019 |  5 min read 

 

It’s been termed flexible retirement¹ – workers looking to transition from full-time work to part-time work, or work in a different capacity, in order to delay full retirement.

Instead of going all the way on retirement, it means that retirement, instead, may be regarded as a more active life stage that is a blend of work and leisure.

This gradual transition from work to non-work may involve shifting from full-time to part-time work, taking on a new role that is less demanding or more satisfying, or even pursuing an encore career. It is an opportunity for workers to continue earning an income, stay active and involved, while freeing up time for family, friends, and enjoyment before eventually retiring fully.

Australian Bureau of Statistics figures show that of workers in 2017 who intended to retire, approximately 37% intended to leave full-time work and take up part-time work before retiring.²

The benefits of transitioning to retirement

The option of a bridging job, part-time employment or self-employment as a transition to retirement may have health as well as financial benefits for individual workers.

While the research does not show conclusive health benefits, continuing work in a part-time capacity may contribute to mental wellness and prevent some issues that may be associated with the end of working life.

Queensland Health says some new retirees may worry that their days have less purpose because they don’t have work, that they will be bored, or that they will miss the social connection they had with their co-workers or clients.³ Being “bored or needing something to do” is actually one of the more common reason workers give for returning to work after retirement.⁴

Continuing in a part-time capacity may help as it means work continues to offer a routine and purpose, a social environment and a community.

Learn about the pros and cons of a Transition to Retirement strategy

Who is downshifting to retirement?

Australia is among the nations where more people are indicating they envision a flexible transition when they were ready to move to retirement, according to a global retirement readiness survey⁵ based on 16,000 workers and retirees.

It found more than half of workers (56%) globally envision a flexible transition to retirement, with the figures at 55% for people 55 years and over, while they are even higher among younger workers.

The most common reasons for continuing to work to some extent in retirement include keeping active, enjoyment of work, and financial-related concerns.

By comparison, of the Australians who participated in the survey, 70% envisioned a flexible transition to retirement, which was the second highest among the 15 countries surveyed.

For people aged 55 and above, 77% of Australians anticipated a flexible transition to retirement and 81% of those said it was because they wanted to keep active.

Your path to retirement

If you are considering part-time work or a flexible retirement, consider these steps:

  Know how much money is enough to retire
The Association of Superannuation Funds of Australia⁶ has crunched the numbers to help show you what retirement may cost. You can also use our Super and Retirement Planning Calculators to see what super balance you’re tracking towards, and what income that balance will likely give you.

  Support for transitioning to retirement
You may transition to retirement by accessing your super while you are still working and draw an income stream to supplement your salary.

  Know the latest rules
Brush up on new rules that may apply to your super and retirement. These may include work test exemptions for new retirees.

  Have a plan
Financial advice⁷ may help you save money right now, build a better retirement and make the most of your life after work.

 Compare your options
Super is there to help provide you with financial security when you stop working, so it makes sense to choose a top-performing super fund. Find out what to consider when comparing Australia’s top performing super funds.

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1. Aegon Centre for Longevity and Retirement and Transamerica Centre for Retirement Studies, The New Flexible Retirement, 2015, accessed 4 June 2019 at https://www.transamericacenter.org/docs/global-survey-2015/tcrs2016_sr_the_new_flexible_retirement_report.pdf
2. Australian Bureau of Statistics, December 2017, Retirement and Retirement Intentions, Australia, July 2016 to June 2017, accessed 4 June 2019 at https://www.abs.gov.au/ausstats/abs@.nsf/mf/6238.0
3. Queensland Health, 13 August 2018, Mental health in retirement: what you can do to stay healthy and happy, accessed 4 June 2019 at https://www.health.qld.gov.au/news-alerts/news/mental-health-retirement-older-people
4. Australian Bureau of Statistics, Retirement and Retirement Intentions, Australia, July 2014 to June 2015, accessed 3 June 2019 at https://www.abs.gov.au/ausstats/abs@.nsf/Previousproducts/6238.0Main%20Features3July%202014%20to%20June%202015
5. The Aegon Retirement Readiness Survey 2015, How is Flexible Retirement viewed in Australia, accessed 4 June 2019 at https://www.aegon.com/contentassets/fact-sheet-flexible-retirement-australia.pdf
6. Association of Superannuation Funds of Australia, March quarter 2019 report, accessed 6 June 2019 at https://www.superannuation.asn.au/resources/retirement-standard
7. Advice fees may apply. Refer to the Financial Services Guide for more information.