One mistake to avoid to retire on your own terms

When Australians think about retirement, it’s usually with a planned retirement age in mind. But, as new research from CFS reveals, for the majority, that’s not quite how retirement plays out. Just one in three Australians retires when they want to, according to our 2024 Rethinking Retirement report.  

Health issues, redundancy and other life events are among the primary reasons most people ultimately decide to stop work. The traditional idea of retirement as a point in time when we lay down our tools for good is also becoming less common.

Two in three Australians plan to continue working past the current retirement age of 67. Most would like to work in the same job with reduced hours, some want to work the same hours, and others are keen to pursue a passion project at less pay and fewer hours. 

But relying on working to your ideal retirement age to deliver a comfortable lifestyle in retirement could be a costly mistake if life intervenes. Those who seek financial advice and plan for their retirement are twice as likely to retire at a time of their choosing. 

Unfortunately, most people either plan too late or not at all.  

Less than one in three Australians aged between 50 and 64 understands what retirement planning actually entails. Most people have little idea of how much money they’ll need for a comfortable retirement. This is both the first thing Australians want to know about retirement, and the question many are too embarrassed to ask. 

On average, Australians believe they need $1.6 million to be comfortable in retirement. Younger Australians believe they need even more. 

But according to the Association of Superannuation Funds of Australia, the amount you need as a couple to live comfortably is less than half that. For a couple with a partial age pension, it’s $690,000, and $595,000 for a single person. 

What does that mean? A modest retirement might include the occasional night out at the movies or a local restaurant and a local holiday with family. A comfortable retirement might include overseas travel.  

This discrepancy illustrates how important it is to help more Australians receive financial advice. Many people don’t know the answers to common questions such as the number of hours they can work once retired and still get the age pension. 

We know from our research that two in three advised Australians are positive about their financial situation. This figure falls to less than half among those who don’t receive advice. 

People with the same level of wealth and income may have a very different perception of their financial situation, depending on whether they have accessed advice.  

There are many tools and calculators available to help people determine how much money it takes to retire comfortably. 

Financial advice plays a crucial role helping Australians navigate the complexities of the superannuation, tax and social security systems, as well as shifting from full-time work to retirement. 

And it builds the confidence that enables people to enjoy their second half without constantly worrying they’re going to run out of money.