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  • Experts are urging people entering retirement age to plan ahead for a comfortable lifestyle. (AAP)Source: AAP
Australia's population is ageing: the Federal Treasury says over the next 40 years the amount of people aged over 65 years old will nearly double. With less working people to support a population that are living longer, experts are urging people entering retirement age to plan ahead for a comfortable lifestyle.
Amy Chien-Yu Wang

30 Sep 2015 - 9:00 AM  UPDATED 21 Dec 2015 - 11:57 AM

According to the Federal Government's 2015 Intergenerational Report, nearly a quarter of Australia's population will be aged over 65 by 2050.

But the latest figures show one million working Australians haven't thought of options or timing of their retirement.  UNSW School of Psychology retirement expert Dr Joanne Earle says for a fulfilling retirement, people need to make plans.

"One of the things that determine if people are satisfied during retirement is met expectations - so if you're not clear about what it is you want to get out of retirement and when you want to retire, then you might find the reality quite different to what you thought it would be. So planning ahead to think what reality will be like is important to managing expectations."

She says that plan must also take into account unexpected circumstances.  

"If we look at the Australian Bureau of Statistics results about a quarter of people will leave work unexpectedly and earlier than they planned due to ill health. Especially for males, redundancy is the second reason that we see people leaving the workforce unexpectedly. So having a plan in place for what you would do if you were made redundant is always a good strategy as well."

Dr Earl says the planning process should start as soon as possible.

"I believe that people should begin planning in their forties and they should continue to plan more as they get closer to retirement.  The reason being if you want to retrain that's going to take some time, if you've got some idea about investment or how your money's going to perform, then that could be a fairly long range plan and not something that could be realised in the short term period over say four or five years. It might be more likely to be realised over a fifteen year period."

David Williams runs a website called "My Longevity" which helps people forecast their life span.

He believes good financial planning should take into account the number of years remaining in one's life.

"The first thing to figure out is how long you might be likely to live for. The second thing is how well might you be for those years. Now if you go back to what the government's timeframe suggests from the official life table figures, at 65 the government's average is you'll live till about 84, a bit longer for women, but it's not right. In fact people that are trying to be self sufficient in retirement and that are reasonably well at 65 are going to live at least twenty five per cent more than the average that the government is suggesting. Instead of being 20 years, it's more like 25 years. That makes a big difference to the way you approach that time. That makes a big difference to how much money you'll need of course."

One of the Federal Government's recent budget measures is an increase in the age of eligibility for the pension. If passed, the age when people can access the pension will rise from 65 years to 70 years by 2035.  With this possible change, David Williams suggests we should consider working as long as we can.  

"Nearly two-thirds of Australians rely on the age pension which is provided by the government and this is dangerous. I don't think as a community we will be able to maintain the purchasing power of the pension for nearly as well as we have up to now. The reasons are we are living longer, there'll be less people working, so there'll be a smaller cake to divide up. So at 65 you'll be nearly on average, disability free until about 75. So why would you stop working? If you work longer for every extra year you work you'll be able to fund another two years in retirement."

However, a recent survey conducted by the government found there is in fact widespread prejudice against older employees in the workforce.   Age Discrimination Commissioner Susan Ryan says over a quarter of workers aged over fifty experience some form of discrimination in the past two years.

"Employers seem to have an irrational prejudice against people once they've turned 50. All of the evidence is that generally people are in good health, they are highly motivated at that stage plus they bring all those years of experiences. So from a rational point of view you'd think they'd be the most preferred employees."

Commissioner Ryan encourages employers to be more imaginative with flexible work structures to cater for Australia's ageing population.  

"Because of information technologies, a lot of work can be done efficiently and very well from home so people don't have to do a lot of travelling. It can also be that a forward looking employer can change the work structure so that a person who might want to transition to a three day week is able to do that with no loss to the employer or to himself or herself, and perhaps work in a shared job with a new worker starting off who only wants to work two days a week because she has young children or completing some studies."

US-based Dr Mo Wang is editor-in-chief of Oxford University Press' Work, Aging and Retirement Journal.  He says working beyond the conventional retirement age is beneficial for one's mental wellbeing.

"My study shows actually people want to continue working after retirement. They want to continue their career identity, so for example if you are an accountant, after retirement, you may still want to help people with tax, either get paid or not paid, voluntarily. Think about this, we usually spend a long time in working and where we work define who we are, so basically in retirement if we can keep that identity going a little bit longer it helps you adjust into retirement."

Dr Wang believes maintaining work also helps retirees live a more structured and meaningful life. 

"At the point of retirement your identity would change and this kind of identity change engenders all kinds of different processes in the psychological wellbeing as well as physical wellbeing because you don't have to go to work everyday.  Because if you go to work everyday you have a time structure but if you don't do that then your time structure is gone.  And that actually impacts how you allocate your energy and often times your energy level actually become lower."

Dr Joanne Earl agrees.  She says working in retirement may also present new opportunities.

"And I've got lots of examples of people who've gone on in retirement to set up brand new businesses for themselves that have been very productive that they then on-sold and have fully retired but not in their 60s, but in their 80s. So there is a possibility that people can be using this period to realign themselves."
Working during retirement also helps people to stay connected to others.

"When people leave their work environment, they actually don't have another social network that is as extensive as their work environment. The person is going to feel very lonely and very hard for them to recover from that kind of wellbeing decline. You want to put yourself in a rich social network with people who actually are really close to you, you can share your thoughts with. Those are really important. so we see family actually play a very important role in shaping people's retirement life."

As well as maintaining a good social network, Dr Joanne Earl says people should keep setting new goals throughout retirement.   

"So we see people doing big things like repainting their house, or going around travelling through Australia, or going on a cruise. There is something quite significant they've planned to do and they've done that within the initial 18 months. After that there can be the sort of sensation that they've done all those things and they're starting to get bored. Those people who continue to plan during retirement also report being better adjusted so planning is not a one off event it's not something that you just do before you retire.  Its something you should continue to do throughout retirement and that includes setting goals new goals for yourself."

If you haven't made plans for your retirement yet, perhaps its time to start setting some goals.