The concept of retirement and what that looks like to individual Australians has changed over the years.
Some aspects remain largely common—the desire to travel, exploring a sea or tree change, and spending more time with family. But as we’ve seen from new research, the face of retirement could continue to look increasingly different the in future.
With approximately 2.5 million Australians set to enter retirement between 2025 and 2035, it’s important that as an industry we understand what matters to them.
Last month UniSuper published our first Retire with Purpose report, which identifies that 81% of Australians plan to continue working after they retire. This indicates more than a level of financial unpreparedness or a desire to top up one’s savings—but a strong desire to maintain that sense of identity brought about by the workplace, and the connections and friendships therein.
In light of the research’s findings, we can point to three key drivers that reflect the community’s priorities and form the foundation of a purposeful retirement. They are advice and guidance, social connection and ‘practising’ retirement. Here, we’ll delve into these pillars, exploring how they intersect and how retirement extends beyond mere dollars and cents.
Advice and guidance
One in four surveyed in the Retire with Purpose report said they weren’t confident of retiring at their planned age, suggesting a level of unpreparedness. Of them, 31% said their main concern was not being able to support themselves, and 24% said they worried about having insufficient savings to fund their ideal retirement.
Good quality financial advice can be the difference between a modest retirement and a comfortable one, and we know that knowledge bestowed by a professional can empower better financial decision-making.
Two-thirds of pre-retirees who said they were confident in how much they need to retire had received professional advice. Moreover, 74% of UniSuper members surveyed who said they were confident in how much they need to retire had received financial advice.
For example, one of our members, Deirdre reflects on her advice experience: “I had no idea if my balance was enough for me to retire on. After working with the adviser and going through the financial modelling, I learned I was financially prepared for retirement.”
Perhaps most telling is that those who received financial advice – both UniSuper members and the general population surveyed – had higher super balances. 82% of Australians with a balance over $500,000 received financial advice versus just 48% of those with a balance below $500,000. Among UniSuper members, 83% with a balance over $500,000 received financial advice, compared to 62% of those with a balance below $500,000.
Yet, while we know quality financial advice can enhance retirement outcomes, we’re equally aware – maybe more so – that many Australians face barriers to receiving advice, even though they seek it. We call this cohort the ‘missing middle’, and as a fund and industry, it’s crucial we look to make advice more accessible to this cohort.
Social connection
The report’s findings highlight the importance of maintaining social connection and purpose in retirement. Pre-existing Australian Bureau of Statistics (ABS) data tells us that more and more people are living alone—this number has increased by 44% over the past 40 years. One in five older Australians surveyed in our report identified feelings of isolation.
Together, these are likely contributors to an increasing number of people remaining in the workforce in retirement. In fact, over 50% of respondents said they want to stay in the workforce in retirement. For many – around 59% of respondents – it’s as much about enhancing financial security as it is a sense of identity.
Around 61% of pre-retirees surveyed worry about missing the social connection the workplace provides. Interestingly, 40% of retirees called out the importance of making new friends versus only 27% of pre-retirees, suggesting this concern may only become significant once they actually retire.
“I made sure I had a social network in place before I retired,” UniSuper member William said.
“I’d seen my colleagues enter retirement and they didn’t do much for the first 12 months. I saw their health deteriorate and decided I wanted to keep myself busy.”
This realisation supports the notion of ‘practising’ retirement while pre-retirees are still in the workforce.
Practising retirement
Given there’s more and more versions of what an ideal retirement looks like, one way to improve retirement preparedness could be to ‘practice’ retirement. This means testing future plans and important lifestyle changes while still working to build confidence.
The report found 61% of pre-retirees spend free time enjoying existing hobbies, but a further 25% said they’re interested in learning new skills. In ‘practising’ these pursuits, both lend themselves nicely to concurrently addressing concerns around friendship and social connection.
“I was wondering how I’d fill every day given there’s so much structure when you work five days a week for 40 years. That was a concern, how was I going to have structure moving forward?” member Deirdre adds.
“Structure is terribly important to me. I enrolled in a degree to help give me some purpose. I allocated at least three days a week for study. In a way it was a transition to retirement, it gave me some structure, but I also had flexibility and independence.
“I wanted to wake up and have something to do each day.”
Read the Retire with Purpose report by UniSuper
You can download and read the full Retire with Purpose report on UniSuper's website.
Giacomo Tarantolo is the Manager of Retirement Solutions at UniSuper, a sponsor of Firstlinks. This article is an opinion piece based on Giacomo’s experience in the industry. For more articles and papers from UniSuper, click here.
Disclaimer
Please note that past performance isn’t an indicator of future performance. The information in this article is of a general nature and may include general advice. It doesn’t take into account your personal circumstances, financial situation, needs or objectives. Before making any investment decision, you should consider your circumstances, the PDS and TMD relevant to you, and whether to consult a qualified financial adviser.