Should I delay retiring?

EXPERTS SAY STRESSING ABOUT FINANCES POST-WORK LIFE IS OFTEN UNJUSTIFIED

Sinking investment values and surging living costs are prompting more older Australians to consider delaying their retirement, but they are being urged to double-check their finances first. Retirement specialists say there is more financial help available than many seniors think, and it can help reduce rising stress levels.

New research by AMP has found concerns about retirement have escalated, with three in five Australians worried they won’t have enough to retire, up from two in five in 2020. Their stress is being compounded by consumer price inflation climbing at its fastest rate in decades, the stock market falling more than 15 per cent in the past six months and house prices tipped to drop more than 20 per cent as mortgage interest rates multiply.

AMP’s general manager retirement solutions, Ben Hillier, says about one in three people would be willing to downgrade their lifestyle expectations, while 61 per cent of people would be prepared to work longer.

“But this might not be necessary,” he says. “Many of us underspend in retirement, passing away with as much as 90 per cent of our super savings untouched, according to Treasury’s Retirement Income Review.”

Hillier says employees are twice as likely as retirees to feel stressed.

“People are actually more confident when they move into retirement because they realise their dollars go further when they are untaxed,” he says.

Life becomes cheaper as mortgages are repaid and children move out of home.

“Pharmaceuticals, rates, transport and even coffee can get cheaper when you are a senior,” Hillier says.

CLARITY FIRST

JBS Financial Strategists CEO Jenny Brown says retiring when you want “comes down to making sure you planned well in the first place”.

“Understand how much you will need to live on, know what your goals are and know how much that’s going to cost you,” Brown says.

“Have that clarity before pulling the pin on retirement,” she says.

“Most people, if they have a choice, will opt to continue working for another year or two, whether full-time or part-time. It’s a conversation we regularly have with clients, irrespective of what the markets are doing.

“We are talking some clients into continuing to stay working, just as we have told other clients ‘you don’t have to work any more’.”

Embrace the age pension, which a majority of seniors receive. Just a small part pension from Centrelink can deliver big savings.

“You only need $1 of age pension to get all the discounts on rates, regos and potentially insurance,” Brown says.

Some seniors dip into their home equity using reverse mortgages but Brown says she is “not a fan”.

“I think there are too many rules and people aren’t fully aware of the consequences … there is an aged care flow-on effect.” A reverse mortgage can potentially impact seniors into a nursing home.

“If one partner needs accommodation and the other person doesn’t, how do you fund that?,” Brown says.

FREE CALCULATORS

She says consider if you are eligible for the Commonwealth Seniors Health Card, which can deliver huge discounts on medicines plus other benefits for people who cannot receive an age pension.

AMP’s Hillier says planning can start with free retirement calculators offered by super funds or moneysmart.gov.au.

“Speak to your super fund, which often can provide free retirement advice,” he says.

“It’s not even an either-or choice between retiring or continuing to work. You can fully or partially retire, or go back to work after recharging your batteries.”

The Federal Government offers incentives to work part-time by allowing retirees to earn $7800 a year of income without it counting towards Centrelink’s pension income test, and recently expanded the limit to $11,800 for the 2022-23 financial year to help seniors manage cost-ofliving pressures.”

Hillier says new retirement solutions are emerging, and seniors can consider part-time work or accessing their biggest asset – their home.

“The government’s pension loan scheme pays up to one-and-a-half times the age pension in exchange for some equity in your home,” he says.