Sliding into retirement

Written by Stephen Corby for Seniors Life Insurance.

Every now and then, as a journalist, you’re asked to write a story while looking in the mirror. As someone who’s in his early 50s and works hard to avoid even thinking about retiring, let alone plan for it, being commissioned to interview experts about ‘pretirement’, and to answer the big questions about how to prepare for the end of your working life, has forced some reflection.

Fortunately, I’ve now learned there are people who can help with my kind of prevarication: retirement coaches. One such coach is 64Plus founder Jon Glass, who tackles plenty of the big questions from those pondering what he calls “crossing the bridge from a working life to a retirement one, or from somewhere you know to unknown territory”.

“One thing lots of my clients ask is ‘will I be bored?’, to which I point out the flip side, which is ‘how am I going to take full advantage of all this time I’m going to have?’, because your retirement could last for 10,000 days,” says Jon, 71, who worked as an investment professional for more than 40 years before exploring counselling work.

“We tend to picture retirement as these grey-haired couples looking at a sunset over a beach while having a drink. But that’s not retirement, that’s a holiday.”

A question that took Jon by surprise was from a client who asked, will I still be an interesting person when I’m retired; am I only interesting because I work?

“There’s a traditional approach to retirement that’s known as the three Gs: golf, gardening and grandparenting. And that approach works for some people but not for everyone, because you can do those things, but you can be more adventurous as well, and that’s what a retirement coach can do, open your eyes to more adventurous possibilities,” Jon explains. He suggests it’s best to do your thinking and seek advice about retirement well before you reach 65 which means preparing when you’re in your 50s.

Paving your way

When it comes to planning for your post-work future (and how you’re going to pay for those 10,000 days), it’s recommended you seek professional financial advice. But Patricia Howard, a financial adviser and author of The No-Regrets Guide to Retirement, says many people struggle with this step.

“Part of it is the worry about getting old, and acknowledging that that’s happening, but there’s also a fear that people have, that they haven’t saved enough for retirement, and that makes them very reluctant to seek out the advice of a financial planner,” she explains.

“People see these stories in the media saying that you need to own your own home plus have a million each in super to retire properly, and if they haven’t set aside that amount of money, they feel a bit guilty, almost ashamed, and because of that a lot of people put off seeking out good advice until the very last minute.”

Which brings us to the big question — how much is enough money to retire on? Bec Wilson, retirement columnist, podcaster and author of How to Have an Epic Retirement, says it’s all a matter of maths, but everyone’s personal equation is different. “The first thing to do is to work out how long you think you’re going to live, and you can use an actuary calculation for that.” 

These longevity calculators, widely found online, ask a number of questions about your age and lifestyle to estimate your potential lifespan. “And the answer might well blow your mind, because if you’re born after 1971 in this country, 50% of those people are likely to live to 100,” Bec says.

“Generally, the first 25 years are about enjoying retirement and the last 10 are about managing ageing. Really, retirement should be something to get excited about, how different your life is going to be, and one of the ideas of pretirement is thinking about living out the best bits of retirement sooner.”

Once you’ve grappled with your own mortality, Bec says it’s all about budgeting for the things that you think will make your retirement “epic”.

“You need to do the sums for you personally, because there’s so much to that question. How much you will want to spend on travel each year (if applicable), for example, and some people can live on extraordinarily small amounts of money. It depends on a lot of levers,” she says.

Lifestyle expectations

Senior couple dances on a hotel balcony while on holiday.

“It really depends on your lifestyle and your expectations. For most people, an income of $60,000 to $70,000 a year in retirement (with a mortgage paid off) is going to provide an excellent quality of life, but if you travel a lot and want to live the high life (like upgrade your car regularly), then even $70,000 a year might not be enough to get by,” says Patricia.

Both experts believe it’s important to set yourself up financially as far as possible in advance. One option to consider is superannuation, which can be a tax-effective investment vehicle for your retirement savings. “Once your money is inside super, it’s great, but you have to realise that there are only limited windows of opportunity to put more into superannuation, which is why it’s important not to wait,” says Patricia.

A financial adviser can help navigate the rules and suggest opportunities, which include the potential benefits of downsizer super contributions. As of 2023, if you’re 55 or older, you may be eligible to contribute up to $300,000 from the proceeds of the sale of your home into your super fund tax-free. If you and your partner are selling the house together, you may both be able to claim this exemption, meaning a potential tax-free $600,000 bump for your super balance (for more details, contact the ATO).

“That downsizer bonus is a real game changer in terms of putting assets into a tax-free environment — and informing clients of regulations like that (and there are others) is the big challenge for advisers.”

Where to call home

Where you’re going to live in retirement is another huge question, says Bec, as this has been one area of enormous change in recent years. “We used to have the situation where someone would live in a house all their lives, then the parents would get older and perhaps the kids move back in, or they wait until the parents die and then they sell it and get all of that money,” she says.

“Today, it’s okay to be a bit more selfish, and to live in that lifestyle house you want to enjoy — moving to the country or by a beach, to enjoy that first stage of retirement. Or you might just want a lower-maintenance house, or just to downsize so you’ve got more money to fund your retirement,” she says. “But a lot of people are also choosing to age in a community, rather than their own home, because community living appeals to them, particularly since COVID. Those kind of community-living properties, they can’t build them fast enough at the moment.”

Lorna Swinstead from GemLife, which runs luxury resort-style communities for over 50s in Australia, says people are increasingly seeking that easy living lifestyle at a younger age.

“Over 50s lifestyle resorts are not retirement villages because they cater to a younger demographic who are active and engaged and want to stay that way for as long as possible,” Lorna says. “Therefore, the facilities are a big drawcard, not just in terms of using them for themselves, but for having family and friends visit; 20 to 30 year old kids of homeowners nearly always say they wish there was an equivalent for them.”

Slowing down

Clearly, pretirement is tied into future planning, but Patricia defines the term slightly differently. “What I see as pretirement is a trend among my clients for slowing down to work part-time, because they’ve had senior professional roles that they’ve become tired of, or are burnt out. They look for something else they’d enjoy doing more, and then you see a lot of those people working into their 70s as part of their pretirement. I call it sliding into retirement.”

It's an approach that Jon Glass recommends as part of his coaching. “Retirement doesn’t have to mean that you stop working altogether, it can mean going from full-time to part-time, gradually decreasing your number of work days,” he says.

“Slowing down might be better than stopping suddenly for a lot of people. And that can be a time to experiment, to try something different — writing a novel, for example, volunteering, travel. But you don’t need to go anywhere to make big changes, because retirement can be a real chance to think about your friends and family in a way that you haven’t done for years.”

So how soon should you be thinking about pretirement? According to Bec: “The definition of when pretirement starts is when your kids get their P-plates, because the moment they get their independence, you get yours back; you don’t have to spend so much money on them, you tuck that away and you can start to live out some of your retirement ambitions.

“And I think that’s something to get excited about. The fact is, from around 50, you’re in the very best time of your life, you’ve got a better quality of life, you’ve got less responsibility, the kids are moving out and you can start to make choices. You can see yourself in the mirror again”.

Think ahead and plan

Planning for your retirement means thinking ahead about your future. But what if the unexpected happens and you’re suddenly no longer around? If you want to ensure your family is protected financially, consider having a plan in place with Seniors Life Insurance.