Should We Ditch the Idea Of Retirement?

Written on the 26 January 2024 by Parkside InvestorPlus

Lynda Gratton, a renowned economist, challenges the idea of retiring at 60, rather, advocating for a multi-stage life.

She argues that with increasing life expectancy and technological changes, we need to redesign work. 

And if you think about it, we have been doing so for some time now.

Automation, the internet, smart devices have all changed how we engage with day-to-day life.

We bank online, we bark instructions at Siri or Alexa, we may not even go to the movies anymore, rather, we’ll wait for that big block buster to come on our streaming service.

The point being is that we have adapted to a new way of life and living and life experiences.

The classic and well beaten path to life was;

• Get an education (as well as you can),
• Go and work (most likely for the same company for the remainder of your working life),
• Retire (for as long as is possible).

This 3-stage notion of life is now being challenged by many leading minds including social commentators, life coaches and economists.

What’s being floated now is a more flexible approach that allows individuals to customise their lives through lifelong education, diverse work options, and delaying retirement.

The message here is to ditch the old idea of retirement where your days are meant to be taken up with hobbies, neglected home repairs, endless golf days and the like.

The new paradigm is work longer and create a life that fits your individual needs.

Just to clarify, putting off your retirement and engaging in a more meaningful work life does not mean you forgo taking on new hobbies, home renovations, taking trips or hitting the golf course.

It just means you now can have the best of all worlds!

The ‘real’ story!

The idyllic vision of Australian retirement – sun-kissed beaches, leisurely barbecues, and endless leisure – remains alluring.

However, beneath this dreamy narrative, lies challenges that any retiree must now take into consideration.

Firstly, the widening disparity between life expectancy and retirement age presents a significant dilemma.

As the Australian Bureau of Statistics (ABS) reports, life expectancy in 2024 has climbed to 84.7 years, yet the standard retirement age remains at 67.

This discrepancy leaves individuals with nearly two decades, a substantial portion of their lives, categorised simply as "retirement."

This period of a retiree’s life fails to capture the potential they still have to offer.

Further compounding this challenge is the projected $7.8 trillion shortfall in superannuation by 2050, as outlined by the Grattan Institute.

Solely relying on this accumulated nest egg may not provide adequate financial security throughout an extended retirement period.

This may mean exploring alternative income streams and reassessing traditional retirement planning strategies.

Will I have enough in my superannuation?

In a recent analysis by The Motley Fool in November 2023, they found that the average super balance for someone aged between 60 and 64 was $402,838 for men and $318,203 for women.

If you want to split down the middle, we can make that an overall average of $360,520 for a 60-year-old Australian.

That might be enough to fund a moderately comfortable retirement for someone who owns their home and is also eligible to receive at least a part pension payment.

The truth though is that many retirees will enter the retirement phase with mortgages and will still be looking to live a lifestyle as they did during their working lives.

The notion of retirement being an end of an era has long past.

Just as starting your education, or your first job, or getting married, or starting your family has been considered as life defining moments, so to now is starting your retirement phase.

Retirement must not be thought of as the ‘ending of a life phase’, rather, the beginning of a new phase where your contribution to your community, society and economy is still relevant and needed.

If you’re approaching retirement and don’t feel secure and comfortable about this next phase of your life, then let’s have a chat.  Parkside InvestorPlus at (02) 9899 4899.