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Should you use your retirement savings to pay off debt? Three things to keep in mind

<div class="theconversation-article-body"><em><a href="https://theconversation.com/profiles/bomikazi-zeka-680577">Bomikazi Zeka</a>, <a href="https://theconversation.com/institutions/university-of-canberra-865">University of Canberra</a> and <a href="https://theconversation.com/profiles/jasmine-kinsman-1438670">Jasmine Kinsman</a>, <a href="https://theconversation.com/institutions/nelson-mandela-university-1946">Nelson Mandela University</a></em></p> <p>A host of countries have taken steps to reform the terms under which people can access their retirement benefits. South Africa is the most recent. In 2024 it <a href="https://theconversation.com/south-africa-has-changed-its-retirement-rules-to-help-boost-country-savings-how-it-will-work-233287">introduced changes</a> that allow access to some retirement savings while ensuring that most of the money is still preserved for later.</p> <p>Other countries that have changed the rules to allow members to dip into their savings before retirement include Australia, Chile, India and Portugal. Changes were introduced to ease the financial strain caused by COVID-19 pandemic lockdowns. People across the world are grappling with debt and the cost of living.</p> <p><a href="https://www.treasury.gov.za/comm_media/press/2024/2024%20Two-pot%20System%20Updated%20%20FAQ%20August%202024.pdf">Policymakers</a> have considered this an avenue that offers financially distressed fund members the flexibility to access their retirement funds while still supporting long-term retirement savings. Retirement funds are also often the only sizeable savings that fund members have.</p> <p>A recent report by South Africa’s <a href="https://www.discovery.co.za/portal/business/top-reasons-for-two-pot-withdrawal-requests">Discovery Corporate and Employee Benefits</a>, which represents 3,000 employers that provide pension and provident funds for just over one million employees, found that people aged between 35 and 45 made the most claims to access the savings component of their retirement.</p> <p>When asked what they used the funds for, 24% of members said their withdrawals were for financing home or car expenses. Another 21% of members were using their funds to pay off short-term debt. The majority of members who withdrew their retirement savings were low-income earners (earning up to R125,000 or US$7,000 a year). On the other hand, withdrawals were lowest among high-income earners (earning more than R1 million or US$56,000 a year).</p> <p>This data provides evidence that most low- to middle-income South African consumers are grappling with the trade-off between preserving their capital for retirement and meeting their monthly financial obligations.</p> <p>Given that everyone’s financial situation, goals and needs are different, it’s always best to speak to a financial advisor to assess whether using your retirement savings to pay off debt will be a sound move. But, as academics who have focused on financial planning, we offer three pointers to consider:</p> <ul> <li> <p>understand what you owe, to whom, and what it’s costing you</p> </li> <li> <p>plan beyond paying off debt</p> </li> <li> <p>weigh the pros and cons carefully.</p> </li> </ul> <h2>Know which debt to settle first</h2> <p>Debt with a high interest rate often takes longer to repay, because at the start of the loan repayment period, most of the repayments are going towards interest payments – not reducing the capital amount. If you use your retirement proceeds towards this, it could shorten the period that it would take to settle the loan and reduce the interest repayments, which are compounded according to the outstanding loan balance.</p> <p>Short-term loans, such as those with a repayment term of up to 18 months, tend to have higher interest rates. Unsecured debt, which is debt that is not tied to an asset, also attracts high interest rates because they have little to no collateral requirements. Collateral provides the lender with a guarantee of compensation in the event of default. When there is no collateral, the cost of debt becomes more expensive. Using your retirement proceeds towards settling these short-term loans can free up cash that can be used towards settling other debt and will improve your credit score.</p> <h2>Understanding borrowing behaviour</h2> <p>Using your retirement savings to settle debt should be a priority if you have a plan in place to ensure that your overall financial position will improve. Once the debt is cleared, consider how you can use your free cash in your favour. This could mean boosting your savings or acquiring assets and investments.</p> <p>But if retirement savings are being used to pay off debt while you accumulate more debt, this indicates on ongoing cycle of debt. For example, paying off the minimum amount due on a loan but also consuming the balance that becomes available on the same loan is a sign of poor borrowing behaviour. A more extreme example is taking on more debt to service existing debt.</p> <p>Without a change in borrowing behaviour, using your retirement savings to pay off debt will leave you worse off. You will have missed out on the opportunity to grow your retirement savings and you will have got into more debt.</p> <h2>Debt repayments vs retirement returns</h2> <p>When considering withdrawing from your retirement savings to pay down debt, it’s also important remember this will be at the expense of building your retirement nest egg. For instance, if a 35-year-old were to draw down R30,000 from their retirement fund, that same amount could have grown their retirement capital by over R200,000 by the time they reached 55 years old (assuming an investment return of 10%).</p> <p>Withdrawing your retirement savings on a frequent basis could also mean you may need to work longer and past your intended retirement age to compensate for the withdrawals. Or you may need to find ways to supplement your retirement savings through other investments, or consider reducing your standard of living at retirement.</p> <h2>Is this a sound move?</h2> <p>Remember, withdrawal from retirement savings is subject to tax.</p> <p>While retirement may seem far off when there are more pressing financial needs, using your savings to pay down debt has its advantages and drawbacks. Since withdrawals are being used to pay for expenses and service debt, it’s also important to reflect on borrowing behaviours that may need to be corrected. Otherwise, using retirement savings could become a financial crutch that could make your retirement income less secure.</p> <p>Settling debt using your retirement savings should be done after careful consideration and planning. If in doubt, speak to a financial advisor.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/244837/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><a href="https://theconversation.com/profiles/bomikazi-zeka-680577"><em>Bomikazi Zeka</em></a><em>, Associate Professor in Finance and Financial Planning, <a href="https://theconversation.com/institutions/university-of-canberra-865">University of Canberra</a> and <a href="https://theconversation.com/profiles/jasmine-kinsman-1438670">Jasmine Kinsman</a>, Senior Lecturer in Financial Planning and Certified Financial Planner, <a href="https://theconversation.com/institutions/nelson-mandela-university-1946">Nelson Mandela University</a></em></p> <p><em>Image credits: Shutterstock</em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/should-you-use-your-retirement-savings-to-pay-off-debt-three-things-to-keep-in-mind-244837">original article</a>.</em></p> </div>

Money & Banking

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Eagles star announces retirement after shock health diagnosis

<p>Steuart Smith, the lead guitarist of iconic rock band <em>The Eagles</em> has announced his retirement. </p> <p>The 72-year-old musician, who joined the band back in 2001, shared that he would be leaving the band following a shock health diagnosis. </p> <p>"It is with profound regret that, due to performance issues associated with my recently diagnosed Parkinsonism, I find that I must bow out of my role with <em>The Eagle</em>s while I can still do so gracefully," Smith told <em>People</em> magazine. </p> <p>"It's been a great quarter of a century, and I had hoped to be able to finish out this year with the band, but I must now do what’s best for all concerned."</p> <p>According to<em> Parkinsons.org.uk</em>, parkinsonism is "an umbrella term used to cover a range of conditions that share similar symptoms to Parkinson's".</p> <p>Bandmate and founding member of <em>The Eagles, </em>Don Henley, also released a statement praising Smith's talents, adding that the group will "be forever grateful" for his contributions to the band and their tour. </p> <p>“Steuart Smith has retired from touring. <em>The Eagles </em>will be forever grateful for the extraordinary talents that he brought to both our recordings and live performances," he told the publication. </p> <p>"Steuart will be greatly missed, but he will always be a part of our musical family. We know our many fans join us in wishing him well."</p> <p><em>The Eagles, </em>were formed in 1972 with founding members Henley, Glenn Frey, Bernie Leadon and Randy Meisner. They are known for their hit songs like<em> Hotel California</em> and <em>Lyin Eyes</em>. </p> <p><em style="box-sizing: inherit; margin: 0px; padding: 0px; border: 0px; font-size: 16px; vertical-align: baseline; color: #323338; font-family: Figtree, Roboto, 'Noto Sans Hebrew', 'Noto Kufi Arabic', 'Noto Sans JP', sans-serif; background-color: #ffffff; outline: none !important;">Image: SplashNews.com/ Shutterstock Editorial</em></p>

Caring

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Some ancient Romans got to retire with a pension at 42, but retirement’s changed a bit over the centuries

<div class="theconversation-article-body"> <p><em><a href="https://theconversation.com/profiles/anthony-asher-247115">Anthony Asher</a>, <a href="https://theconversation.com/institutions/unsw-sydney-1414">UNSW Sydney</a></em></p> <p>Over the ages, there have been broadly three reasons why people have retired.</p> <p>Some are forced to by poor health – theirs or someone they care for. Others have alternative income sources, meaning they don’t rely on a regular pay cheque. And some are made to retire by an employer who wants to overhaul staffing.</p> <p>But where did the idea of retirement come from? And how was it handled in ancient times?</p> <h2>Origins of support</h2> <p>Retirement support – which these days comes in the form of superannuation or a government pension – dates back to ancient history in various forms.</p> <p>Some forms of retirement support were funded by local taxes or tithes, others by donations. Some systems were corrupt and the coverage was patchy.</p> <p>Records are not readily available from other cultures, but we know a little about ancient Rome and English history since then.</p> <p>Emperor Augustus, who ruled after Julius Caesar died, set up a <a href="https://pensionresearchcouncil.wharton.upenn.edu/wp-content/uploads/2020/01/03Chap3.pdf">scheme</a> for Roman soldiers more than 2,000 years ago. The scheme aimed to ensure they retired while still strong and healthy, and would be less likely to cause trouble.</p> <p>The scheme paid a decent amount for soldiers after 25 years of service, so retirement age could be as young as 42.</p> <p>Pensions for older people in need also have ancient origins. The New Testament <a href="https://biblehub.com/1_timothy/5-9.htm">Bible</a> records the churches had schemes for needy widows right from the beginning.</p> <p>In the early Middle Ages, monasteries often provided for the needy, but Henry VIII famously <a href="https://en.wikipedia.org/wiki/Dissolution_of_the_monasteries">closed them</a> and took their assets. A fair share of their assets ended up with <a href="https://en.wikipedia.org/wiki/John_Russell,_1st_Earl_of_Bedford">high government officials</a> after the king’s takeover.</p> <p>Industry funds can also be seen to date back <a href="https://www.britannica.com/money/friendly-society">at least to the Middle Ages</a>, where the trade guilds provided for members and their families who fell on hard times.</p> <p>Retail funds mainly began as <a href="https://www.google.com/search?client=firefox-b-d&amp;q=history+of+life+insurance">mutual life insurance companies</a> that began more than 200 years ago.</p> <p>In the 18th century, the East India Company and the Bank of England began <a href="https://sas-space.sas.ac.uk/9224/1/McIlvenna%20PhD%20final.pdf">offering pensions</a>. These were at first discretionary based on need and loyalty, but later covered all employees. This idea then spread to other larger companies such railways and banks.</p> <p>As modern states developed the capacity to collect income taxes, it became feasible to provide comprehensive retirement benefits funded by central government.</p> <p>Beginning with <a href="https://www.ssa.gov/history/ottob.html">Germany in 1889</a>, developed countries began introducing universal national age pension arrangements.</p> <p>Unfortunately, a number of countries, such as <a href="https://www.uncdf.org/article/8799/governor-innovation-key-to-expanding-insurance-and-pension-coverage-in-png">Papua New Guinea</a>, still do not have the capacity to provide a universal safety net to cover older people.</p> <h2>Retirement in Australia</h2> <p>Three Australian states <a href="https://treasury.gov.au/publication/economic-roundup-centenary-edition-2001/article-3-towards-higher-retirement-incomes-for-australians-a-history-of-the-australian-retirement-income-system-since-federation">began schemes</a> in 1900, and the federal government provided a universal (but means tested) scheme from 1909.</p> <p>Most Australian retirees seem to enjoy a favourable standard of living. The <a href="https://grattan.edu.au/news/5-key-takeaways-from-the-retirement-income-review/">Grattan Institute</a> finds that the poorest 30% are, in fact, better off in retirement.</p> <p>Massive house price and rental inflation in the last 30 years, however, has gutted the living standards of those who don’t own their own homes. This gap in the safety net needs to be addressed.</p> <h2>Retirement ages</h2> <p>The Roman army model persists in some countries to this day: retirement from the US military is available <a href="https://sgp.fas.org/crs/misc/RL34751.pdf">after 20 years</a> of service.</p> <p>Retirement this early is obviously very expensive. The church scheme mentioned in the New Testament had a minimum age of 60, which is still the normal retirement age in many countries.</p> <p>The <a href="https://www.oecd.org/en/publications/2023/12/pensions-at-a-glance-2023_4757bf20.html">OECD</a> reports the average age of retirement in their 38 member countries is just under 64 for women, and just over 64 for men.</p> <p>Australians now qualify for the <a href="https://www.servicesaustralia.gov.au/who-can-get-age-pension?context=22526">age pension</a> at 67, which is slightly older than average.</p> <p>Retirement ages are, however, rising to allow for “population ageing”, a longer life expectancy and lower birth rates. Life expectancy at retirement age is the important number when calculating the cost of pensions.</p> <p>In ancient Rome it was about seven years and was <a href="https://www-cambridge-org.wwwproxy1.library.unsw.edu.au/core/services/aop-cambridge-core/content/view/30ED00A164475432670833C87D2F9E97/S2046164X00000405a.pdf/contributions_to_the_history_of_insurance_and_of_the_theory_of_life_contingencies_with_a_restoration_of_the_grand_pensionary_de_wits_treatise_on_life_annuities_concluded_from_no_vi.pdf">about the same</a> in Sweden in the middle of the 18th century.</p> <p>In Australia, the life expectancy of a 65 year old woman has risen from 12 years in 1895 to <a href="https://aga.gov.au/sites/aga.gov.au/files/2020-07/Australian%20Life%20Tables%202015-17%20v5.pdf">23 years on average</a>.</p> <h2>Earnings-related pensions</h2> <p>The <a href="https://www.ssa.gov/history/ottob.html">1889 German scheme</a> paid a minimum pension, plus an earnings-related component. Workers had a book for stamps for each week’s earnings.</p> <p>The Australian age pension has always just paid a minimum “liveable” amount. This has been subject to different means tests over time, but retirees have been able to supplement it with their own savings.</p> <p>Until 1987, only 40% of Australian employees were covered by employer sponsored schemes. Then in 1992, the <a href="https://www.apra.gov.au/superannuation-australia-a-timeline">Superannuation Guarantee Scheme</a> was introduced. Under this, employers were required to contribute 3% into all exployees’ super.</p> <p>The standard rate will rise to 12% in July next year.</p> <h2>The future</h2> <p>A growing ageing population will mean the Australian government and superannuation industry will need to adjust current support systems.</p> <p><a href="https://treasury.gov.au/consultation/c2023-441613">Over the next decade</a>, about 2.5 million Australians will move from accumulation (where you’re building up your super) to join the 1.6 million already receiving super benefits.</p> <p>We can expect more people to be living into their nineties and needing pensions for life.</p> <p>One government <a href="https://treasury.gov.au/sites/default/files/2023-12/c2023-441613-dp.docx">priority</a> is to make lifetime pensions as much part of the Australian system as they are in <a href="https://www.mercer.com/en-au/about/newsroom/mercer-cfa-institute-global-pension-index-2024/">the rest of the world</a></p> <p>And after 30 years of growing complexity in the rules covering superannuation, regulators are <a href="https://www.alrc.gov.au/publication/superannuation-and-the-legislative-framework-for-financial-services-fsl11/">counting the cost</a>, and <a href="https://www.brokernews.com.au/news/breaking-news/asic-targets-regulation-overhaul-286067.aspx">planning some simplification</a>.</p> <hr /> <p><em>This article is part of The Conversation’s retirement series, in which experts examine issues including how much money we need to retire, retiring with debt, the psychological impact of retiring and the benefits of getting financial advice. Read the rest of the series <a href="https://theconversation.com/au/topics/retirement-series-2024-168372">here</a>.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/241121/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></em></p> <p><em><a href="https://theconversation.com/profiles/anthony-asher-247115">Anthony Asher</a>, Associate Professor in the UNSW Business School, <a href="https://theconversation.com/institutions/unsw-sydney-1414">UNSW Sydney</a></em></p> <p><em>Image credits: Shutterstock</em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/some-ancient-romans-got-to-retire-with-a-pension-at-42-but-retirements-changed-a-bit-over-the-centuries-241121">original article</a>.</em></p> </div>

Retirement Income

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Superannuation is complicated. A guaranteed government income in retirement would be simpler

<div class="theconversation-article-body"><em><a href="https://theconversation.com/profiles/brendan-coates-154644">Brendan Coates</a>, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a> and <a href="https://theconversation.com/profiles/joey-moloney-1334959">Joey Moloney</a>, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a></em></p> <p>Having compulsory super should help create a comfortable and stress-free retirement. But Australia’s super system is too complex for retirees to navigate.</p> <p>This can leave them stressed and lacking the confidence to spend their super savings.</p> <p>Our latest report, <a href="https://grattan.edu.au/report/simpler-s%5Buper/">Simpler super: taking the stress out of retirement</a>, recommends the federal government offer all Australians a lifetime <a href="https://moneysmart.gov.au/retirement-income/annuities">annuity</a> - a financial product that pays a guaranteed income for the rest of their lives.</p> <p>This would help retirees stress less, spend more, and enjoy their retirement years.</p> <h2>Stress prompts many to underspend super</h2> <p>For the first time, many Australians are entering retirement with significant super balances: Australians are retiring with an average super balance of more than A$200,000, and couples with about $300,000.</p> <p><a href="https://grattan.edu.au/news/balancing-act/">Despite having saved enough to be comfortable</a>, four in five people say planning for retirement is complicated, and 60% don’t think their retirements will be financially stress-free.</p> <p>Few retirees draw down on their retirement savings as intended. In fact, many are actually net savers – their savings continue to grow for decades after they retire.</p> <p><a href="https://grattan.edu.au/report/simpler-super/">Our analysis</a> of the <a href="https://www.abs.gov.au/participate-survey/household-survey/survey-income-and-housing">ABS Survey of Income and Housing</a> shows for those aged 60-64 in 2003-04, average super balances had grown by 37% in real terms by the time they were aged 76-80 in 2019-20.</p> <p>And their average net wealth, which excludes the equity in their home, grew by 14% over the same period.</p> <p>Australia’s <a href="https://www.apra.gov.au/quarterly-superannuation-performance-statistics-highlights-september-2024">$4 trillion</a> compulsory superannuation system is turning into a massive inheritance scheme. That’s not how super was supposed to work.</p> <h2>Retirees are given too little guidance</h2> <p>The super system makes most big decisions for working Australians, such as how much to contribute or how it’s invested. But once we retire there is little guidance about how to use our funds.</p> <p>More than four in five retirees are steered into account-based pensions. But partly because they’re anxious not to outlive their savings, this group manages their spending very cautiously.</p> <p>While on average, an Australian woman aged 65 today can expect to live until 88, they also have a one-in-five chance of either dying before age 81 or of making it to 94.</p> <p>Half of those retirees who use an account-based pension draw their super at legislated minimum rates, which if followed, leave 65% of super balances unspent by average life expectancy.</p> <p>This widespread use of account-based pensions makes Australia a global outlier. Retirees in most rich countries are automatically given – or otherwise strongly encouraged to choose – <a href="https://www.oecd.org/en/publications/2023/12/pensions-at-a-glance-2023_4757bf20.html">an income guaranteed to last their entire lives</a>.</p> <p>Research suggests having an income that is guaranteed to last until death <a href="https://www.researchgate.net/profile/Keith-Bender/publication/23647866_What_Makes_Retirees_Happy/links/0046353578c678a403000000/What-Makes-Retirees-Happy.pdf">can reduce stress</a> and <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3875802">boost retirees’ spending</a>.</p> <h2>Government could steer retirees into annuities</h2> <p>Our report argues retirees should be encouraged to use 80% of their super balance above $250,000 to purchase an annuity.</p> <p>The government could embed this pre-set guidance throughout the retirement income system. It could be included in all relevant communications with retirees from super funds, and especially at the point of retirement.</p> <p><a href="https://researchportalplus.anu.edu.au/en/publications/default-and-naive-diversification-heuristics-in-annuity-choice">Research shows</a> that retirees tend to choose the option put in front of them.</p> <p>The remaining super balance – $250,000, plus the remaining 20% of any savings above that level – would continue to be drawn down via an account-based pension. Retirees would still have to access their super for large purchases if needed.</p> <p>Using some super to buy an annuity could boost expected retirement incomes by up to 25%, compared to solely drawing on an account-based pension at legislated minimum rates.</p> <p>And it would ensure that the bulk of retirees’ incomes, irrespective of their super balances, would be guaranteed to last the rest of their lives.</p> <hr /> <p><iframe id="TYMjG" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/TYMjG/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe></p> <hr /> <h2>Annuities should be provided by government, not super funds</h2> <p>But steering retirees into annuities offered via super funds is unlikely to work.</p> <p>Super funds <a href="https://www.superreview.com.au/news/superannuation/asfa-urges-against-cipr-longevity-component">have resisted</a> previous attempts by government to <a href="https://consult.treasury.gov.au/development-of-the-framework-for-comprehensive-income-products-for-retirement">require them to offer annuities to retirees</a>.</p> <p>Many people also struggle to understand and compare annuities. They often find it difficult to switch to a better deal later even if they can spot one.</p> <p>Recent <a href="https://www.fca.org.uk/publications/market-studies/retirement-income-market-study">experience in the UK</a> showed when required to purchase an annuity, most people simply took what their fund was offering and often got a poor deal.</p> <p>Designing a regulatory regime that overcomes these issues is a huge challenge. The best option, therefore, is for the government to directly offer annuities. It should offer all retirees a simple lifetime annuity as the baseline option.</p> <p>The government could also offer alternatives including investment-linked annuities, where payments are guaranteed for life, but payments could vary based on investment returns.</p> <p>Priced fairly, and managed by an independent agency, a government annuity would encourage there take-up. Retirees would be more confident that they’re getting a good deal.</p> <p>Annuity payments would be made from the pool of capital created by annuity purchases, with these investments managed by the Future Fund.</p> <p>Under reasonable assumptions we project the government annuity provider could be managing assets totalling 2.5% of GDP by 2040.</p> <p>Superannuation offers Australians the promise of a more comfortable and stress-free retirement. Government-offered annuities can help turn that dream into reality.</p> <p><em>Esther Suckling made substantial contributions to the research underpinning this article.</em><!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/247383/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><a href="https://theconversation.com/profiles/brendan-coates-154644"><em>Brendan Coates</em></a><em>, Program Director, Housing and Economic Security, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a> and <a href="https://theconversation.com/profiles/joey-moloney-1334959">Joey Moloney</a>, Deputy Program Director, Housing and Economic Security, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a></em></p> <p><em>Image credits: Shutterstock</em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/superannuation-is-complicated-a-guaranteed-government-income-in-retirement-would-be-simpler-247383">original article</a>.</em></p> </div>

Money & Banking

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Nick Kyrgios makes retirement announcement after Aus Open comeback

<p>Nick Kyrgios has made a candid admission about his participation in future Australian Opens as his comeback ended in tears. </p> <p>The 29-year-old returned to Melbourne after two years from the AO away to nurse an injury, although his return ended in disappointment in a straight-sets loss to Brit Jacob Fearnley.</p> <p>Many spectators were quick to point out that Kyrgios didn't seem like himself as his injury was affecting his serve and his endurance on the court. </p> <p>After looking down and out, he fought to the very end before crashing to the 7-6 (7-3), 6-3, 7-6 (7-2) loss.</p> <p>Speaking after the match, Kyrgios said he was “heartbroken” at being unable to perform at his show-stopping best, but added that he only played on for the packed John Cain Arena crowd cheering him on. </p> <p>“Realistically I can’t see myself playing singles again here,” he said.</p> <p>“It was special (atmosphere), taking that in, it was pretty good. I knew that I have doubles so I kind of was taking everything in tonight, in those moments, it was nuts."</p> <p>“I didn’t want to just throw in the towel and walk off or retire. I was hurting physically but I respect my opponent and the fans that waited hours to come see me play.”</p> <p>He later added: “Honestly, the reason I kept playing, tried to play tonight, was because of the fans. As I said, I don’t know how many times I’m going to be back here again."</p> <p>“That’s why I didn’t have headphones on, I wasn’t listening to music. I walked out there today, wanted to hear the crowd. There were some special moments.”</p> <p>Kyrgios still plans to team up with Thanasi Kokkinakis in the doubles and will continue to play out the season in singles.</p> <p>“It’s hard. When you’re competing for the biggest tournaments in the world and you’re struggling to win sets physically, it’s pretty tough,” he continued.</p> <p>“But I’ve still got a long year ahead. I’m trusting the process that I can still be able to do some cool things this year at some stage.”</p> <p>Despite the immediate devastation, Kyrgios was targeting a deep run at Wimbledon.</p> <p>“Obviously Wimbledon is a big one for me. I still feel like obviously, if I don’t have an abdominal strain, I feel when I sustained that five days before a grand slam, it’s not ideal,” he said.</p> <p>“Hopefully, if my body’s feeling good, I’ll be able to make some noise at Wimbledon.”</p> <p><em>Image credits: Rachel Bach/Shutterstock Editorial </em></p>

Retirement Life

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Readers response: What has been your approach to reducing or managing debt in retirement?

<p>We asked our readers for their holy grail tips for easing financial strain during retirement years, and the response was overwhelming. Here's what they said.</p> <p><strong>Elaine Ralph</strong> - Don’t accumulate debt, live very lightly, and don’t go to see specialists as they cost a fortune.</p> <p><strong>Karen Howson</strong> - Pay off every debt and stop spending.</p> <p><strong>John Fowler</strong> - We have always budgeted and try to plan for contingencies by allocating for them. We live on our credit card and pay it off when due. My wife has FND so I do all the cooking and keep it simple and cost effective and rarely dine out or eat take away. Our budget has always included allocated "pocket money" for personal spending.</p> <p><strong>Patricia Bennett</strong> - Try to be debt free (particularly mortgages) and stick to a budget.</p> <p><strong>Steve Smith</strong> - Don't have any, and make sure that you can pay your own way 100%. It's called "cut your coat according to your cloth". If you don't know how to budget then learn - it's never ever too late.</p> <p><strong>Barbara Everall</strong> - Stop going out as much as possible avoid the shops.</p> <p><strong>Marie Chong</strong> - Make sure you own your own home, before you retire.</p> <p><strong>Angela Chapman</strong> - Stop spending on unnecessary things.</p> <p><strong>Naomi Jeffrey</strong> - Hope for the best?</p> <p><em>Image credits: Shutterstock </em></p>

Retirement Income

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Tourists reveal dream retirement destination

<p>Many people dream of retiring overseas and Reddit users have shared where they want to spend their golden years. </p> <p>"If you could choose a retirement city among the cities you have visited, which one would you choose?" one user asked. </p> <p>The responses were varied from South Island, New Zealand to Scotland, here are some of destinations:</p> <p><strong>South Island, New Zealand</strong></p> <p>South Island is a dream retirement location for many users on the thread, with "wide open spaces" and "cooler weather" as some of the key reasons why people wanted to retire there. </p> <p>One user wrote: "All the towns we visited [there] were quaint. I could live in any of them." </p> <p>"I loved the ratio of people to wide open spaces. Dunedin was my favourite city, but any of the smaller towns have a lot to recommend them. I also love the cooler weather. Very expensive, though," another commented. </p> <p><strong>Nicosia, Cyprus</strong></p> <p>Others were attracted to the bustling city of Nicosia, with many praising the city's weather and walkability as a plus. </p> <p>"Cypriots are, in general, friendly and down-to-earth people. Nicosia is a capital city with a small-town feel." </p> <p><strong>London, UK</strong></p> <p>While people were divided about retiring in the iconic destination because of the high prices, others praised it for the "metropolitan atmosphere" </p> <p>"Tons of free museums, easy to get around on local buses and Tube, great train links to many places. Free and cheap educational opportunities. Only problem is the cost of housing." </p> <p><strong>Scotland </strong></p> <p>The city's "slow and beautiful" lifestyle makes it a dream retirement spot for many. </p> <p>"I did a house sit in Selkirk, just north of Edinburgh. I could live there very happily. There’s a proper high street with newsagent, butcher, bakery, small grocer. There’s a small loch to walk the dogs around. I left a bit of my heart there," one said. </p> <p>"Any of the little villages on the Isle of Skye. It’s the most beautiful place I’ve ever seen. The people are unbelievably warm and welcoming," another added. </p> <p><strong>Singapore</strong></p> <p>For a few people who have visited the city, the food, climate, "convenient life" and "very good public security" were some of the plus points listed by travellers. </p> <p><strong>Annecy, France </strong></p> <p>The Alpine town had a lot of travellers' interest with any praising its beauty and convenience. </p> <p>"Currently in Annecy for an extended period and it has shot up to my number one as well. I had never heard of it before coming here, but it’s got quite the magical charm about it. Great location as well," one said. </p> <p>"The perfection of the edge of a stunning lake and the base of the French Alps. And only 40 minutes from Geneva Airport," another added. </p> <p>A few other locations mentioned in the thread included the southern Mexican city of Oaxaca, praised for its relaxed lifestyle, and San Diego, USA, praised for its city lifestyle and beautiful beaches. </p> <p><em>Image: </em><em>Collection Maykova / Shutterstock.com</em></p> <p> </p>

International Travel

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Many people don’t get financial advice even though it can help ensure a comfortable retirement

<div class="theconversation-article-body"><em><a href="https://theconversation.com/profiles/antonia-settle-1019551">Antonia Settle</a>, <a href="https://theconversation.com/institutions/monash-university-1065">Monash University</a></em></p> <p>Many Australians, particularly those on lower incomes, are often characterised as <a href="https://www.mpmwm.com.au/latest-news/50475">lacking knowledge or interest</a> in superannuation.</p> <p><a href="https://www.superannuation.asn.au/wp-content/uploads/2024/09/Research-Note-Survey-on-superannuation-and-retirement-Advice-Sept-2024.pdf#_msdynmkt_linkid=48e751d5-debe-4eb2-9309-4bc96b01930a">Research</a> by the Association of Superannuation Funds of Australia (ASFA) confirms this.</p> <p>It found only 51% have sought any sort of financial advice before retiring.</p> <p>Financial advice plays a critical role in helping people maximise their super. But most of us don’t seek professional guidance.</p> <p>To make matters worse, <a href="https://www.theaustralian.com.au/business/wealth/retirement-and-superannuation-questions-not-being-asked/news-story/cc2142c3b32c706ea6ff1dc99dab62a5">superannuation experts</a> say those with small amounts of super are the least likely to seek it.</p> <h2>Financial literacy</h2> <p>The failure of households to approach super like experienced asset managers is often attributed to <a href="https://treasury.gov.au/sites/default/files/2021-02/p2020-100554-ud00b_key_obs.pdf">poor financial literacy</a>.</p> <p>Better <a href="https://www.investopedia.com/terms/f/financial-literacy.asp#:%7E:text=%25%2025%25%200%25-,What%20Is%20Financial%20Literacy%3F,management%2C%20budgeting%2C%20and%20investing.">knowledge</a>, it is often reasoned, would help lower income households make financially savvy decisions. This would help give them a better chance of achieving a comfortable retirement.</p> <p>Getting professional advice about managing retirement savings is a first step towards knowing what you don’t know. Learning to trust independent advice can optimise risk and returns, even if those decisions conflict with our instincts.</p> <p>ASFA <a href="https://www.superannuation.asn.au/wp-content/uploads/2024/09/Research-Note-Survey-on-superannuation-and-retirement-Advice-Sept-2024.pdf#_msdynmkt_linkid=48e751d5-debe-4eb2-9309-4bc96b01930a">research</a> found while trust in super funds was relatively high, only 12% sought information or advice from the funds.</p> <h2>Career interruptions</h2> <p>Some households might have little superannuation because their hourly wages are low and they have long breaks from the workforce. This might be due to raising children, personal illness or caring for others.</p> <p>Instead of being able to rely on public healthcare or pay others to provide this support, they are required to reduce or abandon paid work to do it themselves. This group consists overwhelmingly of <a href="https://www.wgea.gov.au/publications/superannuation-gender-pay-gaps-by-age-group">women</a></p> <p>They are also unlikely to have benefited from high employer contribution rates, such as those of <a href="https://www.csc.gov.au/Members/Funds-and-products/PSSap">federal public servants</a> or university employees, who have long earned a standard 17%.</p> <h2>Tax and other benefits</h2> <p>Low balance households are also unlikely to have paid large sums into super to avoid income tax. <a href="https://www.apra.gov.au/news-and-publications/apra-releases-superannuation-statistics-for-june-2024">One in every four dollars</a> contributed to super is deposited as voluntary contributions, which attract a low tax rate.</p> <p>But most of these low tax contributions are made by <a href="https://australiainstitute.org.au/wp-content/uploads/2024/06/P1527-Who-benefits-The-high-cost-of-super-tax-concessions-Web-1.pdf">the 20%</a> with the highest incomes.</p> <p>In fact, with <a href="https://povertyandinequality.acoss.org.au/inequality/">70% of superannuation assets owned by the wealthiest 20% of households</a>, low balance households have relatively little to gain.</p> <p>Research shows those with the <a href="https://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0008/4630688/ri2023n03.pdf">lowest balances</a> believe superannuation is a largely a tool for high income earners to avoid tax.</p> <p>And while financial advice will always be more useful to those who are able to use <a href="https://www.commbank.com.au/articles/tax/five-ways-to-save-tax-using-superannuation.html">super as a tax minimisation strategy</a>, even for low-balance households – getting financial advice is worthwhile.</p> <p>Financial advice can help households choose investments that optimise the risk/return profile of superannuation at each stage of the life cycle.</p> <p>It can help avoid unnecessary fees and taxes and help people make the best decisions about <a href="https://www.investopedia.com/terms/d/drawdown.asp#:%7E:text=A%20drawdown%20in%20retirement%20is,known%20as%20a%20drawdown%20percentage.">spending in retirement</a> so they can get the most out of their super.</p> <h2>Potential sticking points</h2> <p>The <a href="https://www.royalcommission.gov.au/banking#:%7E:text=The%20Royal%20Commission%20into%20Misconduct,into%20misconduct%20in%20the%20banking%2C">2017 royal commission</a> into banking and finance misconduct revealed major conflicts of interest in the advice sector. This only made some people more wary about trusting a stranger with their life savings.</p> <p>At between $4,000 and $12,000 for a <a href="https://www.moneymag.com.au/financial-planning/learning/how-much-does-financial-advice-cost">personal financial plan</a>, independent financial advice is not cheap. There is free counselling to manage debts but there is no free, independent advice for longer-term financial planning.</p> <p>Recent <a href="https://ministers.treasury.gov.au/ministers/stephen-jones-2022/media-releases/government-unveils-comprehensive-financial-advice">regulatory efforts</a> to better position superannuation funds to provide free financial advice to households will improve access for many.</p> <p>But these efforts won’t resolve the conflict of interest issue, given there is little incentive for funds to suggest investment strategies using other providers. This is particularly important during the <a href="https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/retirement-withdrawal-lump-sum-or-income-stream">draw down phase</a>.</p> <p>This is where people start using their super which they receive as either a lump sum or income stream. The products offered by any single super fund to set this up are limited.</p> <p>Superannuation balances can be seriously eroded by <a href="https://www.ato.gov.au/calculators-and-tools/super-yoursuper-comparison-tool">unnecessary fees</a>, inappropriate investments and poorly planned <a href="https://www.superguide.com.au/in-retirement/minimum-pension-payments-reduced">draw down</a> strategies. This is particularly damaging when low balances are involved.</p> <h2>Facing poverty in retirement</h2> <p>As a result, failure to seek financial advice can increase the risk of elderly poverty, especially if people retire without having bought or paid off a home.</p> <p>Any savings that can be preserved can make a meaningful difference to the capacity of such households to have a dignified retirement.</p> <p>For these reasons, access to free and independent advice is critically important for the superannuation system to better serve low-balance households. But free, independent advice is still not available in the superannuation system.</p> <p>It is not surprising low-balance households are reticent to engage in super given the lack of accessible advice. But the peripheral role of low-balance households in a system dominated by Australia’s wealthiest households may play a role in that reticence as well.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/240207/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><a href="https://theconversation.com/profiles/antonia-settle-1019551"><em>Antonia Settle</em></a><em>, Lecturer, <a href="https://theconversation.com/institutions/monash-university-1065">Monash University</a></em></p> <p><em>Image credits: Shutterstock </em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/many-people-dont-get-financial-advice-even-though-it-can-help-ensure-a-comfortable-retirement-240207">original article</a>.</em></p> </div>

Money & Banking

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Retiring with debt? Experts explain downsizing, using super for your mortgage, and pension eligibility

<div class="theconversation-article-body"> <p><em><a href="https://theconversation.com/profiles/kathleen-walsh-218536">Kathleen Walsh</a>, <a href="https://theconversation.com/institutions/university-of-technology-sydney-936">University of Technology Sydney</a> and <a href="https://theconversation.com/profiles/jemma-briscoe-2234812">Jemma Briscoe</a>, <a href="https://theconversation.com/institutions/university-of-technology-sydney-936">University of Technology Sydney</a></em></p> <p>About <a href="https://cepar.edu.au/sites/default/files/cepar-research-brief-housing-ageing-australia.pdf">36%</a> of homeowners still have a mortgage when they retire, up from 23% a decade ago.</p> <p>This increase in mortgage debt is due to soaring property prices, <a href="https://www.mlc.com.au/content/dam/mlc/documents/pdf/retirement/retirement-reports-housing-report.pdf">changes in retirement ages</a> and easy access to <a href="https://www.dss.gov.au/our-responsibilities/seniors/benefits-payments/home-equity-access-scheme">drawdown equity loans</a> (where you use your home as security to get a loan, which can be used to fund travel, medical costs and other expenses).</p> <p>So, what are the options for homeowners who carry debt into retirement?</p> <h2>Option 1: keeping the home and the debt</h2> <p>If you keep the family home in retirement, you get to own a property and can still receive the <a href="https://www.dva.gov.au/get-support/financial-support/income-support/what-changes-your-payments/your-property-or-accommodation/how-owning-home-can-affect-pensions-and-payments">age pension</a>.</p> <p>For example: Jackie has a home worth A$2 million with a $200,000 mortgage. She also has $800,000 in superannuation. She is 67 but is not eligible for the age pension because her <a href="https://moneysmart.gov.au/how-super-works/tax-and-super#:%7E:text=If%20you're%20aged%2060%20or%20over%20and%20withdraw%20a,as%20a%20public%20sector%20fund.">assessable assets</a> – her super – is above the $695,500 cut off.</p> <p>If Jackie takes $200,000 from her super and repays the outstanding mortgage debt, she will save on interest and principal repayments for the next ten years. She will also reduce her assessable assets by $200,000. This makes her eligible for a part pension.</p> <p>So while Jackie has less super, she gets to receive a pension and gets all the subsidies associated with being a pensioner.</p> <h2>Option 2: downsizing to clear the debt</h2> <p>Downsizing can extinguish any remaining debt, and can free up money for holidays, restaurants and the good life in retirement. It also enables a move to a more age-friendly home or apartment.</p> <p>And the government does provide a superannuation incentive via the <a href="https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/how-to-save-more-in-your-super/downsizer-super-contributions">downsizing contribution</a>.</p> <p>This allows homeowners over 55 who have lived in their home for more than ten years to make a one-off contribution of $300,000 (singles) and $600,000 (couples) to their super, using money from the sale of their home.</p> <p>But when a person reaches pension age, currently 67, any money in super will be included in <a href="https://www.servicesaustralia.gov.au/deeming?context=22526">the government’s assessment</a> of your financial assets and income. It could mean you don’t qualify for a pension or pensioner subsidies.</p> <p>Of the approximately 2.6 million who receive a part or full the age pension, only <a href="https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/super-statistics/downsizer-super-contributions-data">78,000 people</a> have taken up this initiative. That begs the question if this option really does create a true financial downsizing incentive.</p> <p>Think again of Jackie, the woman with the $2 million home and the $200,000 in mortgage debt. Say she decides to sell her home and move to a smaller house close to family and friends. This will incur about $40,000 in selling and marketing fees, and stamp duty of around $62,000 on her new $1.4 million apartment.</p> <p>Downsizing leaves her with $1.1 million in financial assets (after transaction costs), which means that Jackie is not eligible for the pension.</p> <p>While she’ll be able to fund a comfortable lifestyle, this decision to downsize may not be as attractive as keeping the house.</p> <p>The decision to sell and move has cost her an extra $100,000 in transaction costs and her pension.</p> <p>So, people need to think carefully about downsizing. It can allow people to move closer to children, grandchildren, and the services they need – but these must be balanced against the financial implications.</p> <h2>What about renters?</h2> <p>Paying market rent while on a fixed income can be very hard, so renting is a challenge for retirees.</p> <p>According to the <a href="https://www.abs.gov.au/statistics/people/housing/housing-census/latest-release">2021 census</a>, women aged 55-64 and those over 65 are among the fastest-growing groups experiencing homelessness.</p> <p>The good news is many profit and not-for-profit retirement communities provide rental models and discounted entry contributions to residents with limited means (but there are often waiting lists).</p> <p>Retirement village residents may also be eligible for <a href="https://guides.dss.gov.au/social-security-guide/4/6/4/30">rent assistance</a> depending on their circumstances.</p> <p>Rent assistance is an extra $5,751 per year in social security benefits and provides extra financial support to <a href="https://guides.dss.gov.au/social-security-guide/5/1/7/10">eligible age pension recipients</a>.</p> <p>Retirement communities provide vulnerable older Australians a unique opportunity to move into a community under a leasehold or licence agreement. More than 260,000 senior Australians live in about <a href="https://www.propertycouncil.com.au/media-releases/retirement-living-construction-leads-wary-market">2,500 retirement communities</a> across the country.</p> <p>While a retirement village may not be the first option for many retirees, they can provide affordable accommodation.</p> <h2>Making the best choice</h2> <p>Navigating housing decisions as you approach retirement means balancing financial, emotional, and lifestyle considerations.</p> <p>Homeowners retiring with a mortgage face a choice: keep their home or downsize to alleviate debt.</p> <p>Keeping the home and accessing super to pay the outstanding debt improves cash flow and allows you to keep your biggest asset.</p> <p>Downsizing helps eliminate debt and boosts the super balance, but comes with extra transaction costs (and you may end up with less pension, or none at all).</p> <p>Seeking professional <a href="https://moneysmart.gov.au/financial-advice/choosing-a-financial-adviser">financial advice</a> is crucial, and ensure they are a registered <a href="https://moneysmart.gov.au/financial-advice/financial-advisers-register">financial advisor</a>.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/240679/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><em><a href="https://theconversation.com/profiles/kathleen-walsh-218536">Kathleen Walsh</a>, Professor of Finance, <a href="https://theconversation.com/institutions/university-of-technology-sydney-936">University of Technology Sydney</a> and <a href="https://theconversation.com/profiles/jemma-briscoe-2234812">Jemma Briscoe</a>, Adjunct lecturer in finance, <a href="https://theconversation.com/institutions/university-of-technology-sydney-936">University of Technology Sydney</a></em></p> <p><em>Image credits: Shutterstock </em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/retiring-with-debt-experts-explain-downsizing-using-super-for-your-mortgage-and-pension-eligibility-240679">original article</a>.</em></p> </div>

Retirement Income

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‘Is this all there is?’ Retirement can be a painful transition if we don’t adjust our thinking

<div class="theconversation-article-body"><em><a href="https://theconversation.com/profiles/susan-moore-1446031">Susan Moore</a>, <a href="https://theconversation.com/institutions/swinburne-university-of-technology-767">Swinburne University of Technology</a></em></p> <p>The age at which Australians can receive the pension has <a href="https://www.dss.gov.au/seniors/benefits-payments/age-pension">risen to 67</a>, meaning many of us are working longer. But the length of time we are expected to spend retired has also risen, because <a href="https://www.abs.gov.au/statistics/people/population/life-expectancy/latest-release">we are living longer</a>.</p> <p>It’s not unreasonable to expect the retirement phase will last about 20 years, perhaps longer. How should people approach it?</p> <h2>Are retirees satisfied?</h2> <p>In 2018 a colleague and I <a href="https://www.routledge.com/Women-and-Retirement-Challenges-of-a-New-Life-Stage/Moore-Rosenthal/p/book/9781138045231">surveyed nearly 1,000 Australians</a> aged 55 and over who described themselves as fully or substantially retired from the workforce.</p> <p>Most were very satisfied (51%) or satisfied (35%) with their retirement, and the majority rated their post-retirement life satisfaction as better (47%) or the same (39%) as it had been when they were working.</p> <h2>What do retirees like most?</h2> <p>Retirees in our survey talked about freedom. Freedom to sleep in, travel, catch up with friends and family, renovate, garden, get fit, try art classes, learn Italian and if they can afford it, spend up big.</p> <p>But even freedom can have a downside. One woman from the survey said after four months she got sick of it, asking “Is this all there is?”</p> <p>So what did retirees miss most? Money was a big issue for nearly 20%, and about one-third felt their financial position had worsened, even though the group had mainly worked in professional and white-collar jobs.</p> <p>But the things they missed most were social – the opportunity to make new friends, to engage in new activities, and to feel useful. They said things like:</p> <blockquote> <p>I miss the companionship of working in a team. Miss some of the social connections that I once enjoyed.</p> </blockquote> <p>Work not only provides income and social contact, it also has the capacity to engender a sense of meaning and purpose. Some retirees commented specifically on this</p> <blockquote> <p>I miss the sense of purpose. While it was hugely stressful, I felt useful. Now I keep feeling at a bit of a loss as if I should be doing something.</p> </blockquote> <h2>Identity loss</h2> <p>There’s also the issue of <a href="https://www.taylorfrancis.com/books/mono/10.4324/9780203786338/marienthal-marie-jahoda-paul-lazarsfeld-hans-zeisel">identity loss</a>. Work provides us with status; it enhances our sense of self. Achievement of work goals can build confidence and self-esteem.</p> <p>When we meet a new person, often the first question they ask is “what do you do for a living?” It can feel as though your work defines you as a person, rather than your many-faceted self.</p> <p>Not surprisingly, our study respondents frequently commented on retirement as challenging their sense of identity.</p> <h2>The retirement journey</h2> <p>So it is important to remember retirement is not just an event, it’s a process.</p> <p>In any <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/j.2161-1920.2011.tb01102.x">major life transition</a>, it’s necessary to adapt our roles and expectations. Even the most exciting life changes, such as becoming a parent or winning a lottery, involve psychological work.</p> <p>We are likely to experience strong emotions, both positive and negative, as we experiment, fail, lose heart, try something else and eventually adjust to a new reality.</p> <p>These adjustments might be greater for retirees who go from full-time work to full-time leisure, than for those who move gradually through part-time or casual work or who quickly take up new activities they’ve been planning for years.</p> <p>Mark Cussen, a financial planner specialising in retirement, argues the retirement journey takes us through <a href="https://www.investopedia.com/articles/retirement/07/sixstages.asp">several psychological stages</a>, including a honeymoon phase in which new retirees feel relieved as the constraints of working life are removed.</p> <p>However, the initial sense of freedom loses its novelty value. Some retirees then go through a phase of disenchantment. Life can feel boring, lacking in purpose or weighed down by domestic duties and activities that do not challenge or bring joy.</p> <h2>The ‘best years of our lives’</h2> <p>The final phase is adaptation, involving a re-orientation of identity from worker to someone who finds meaning and purpose in a different set of activities.</p> <p>This change usually involves renegotiating relationships with family and friends as well as experimenting with new activities, interests and friendship groups.</p> <p>Over time, most retirees develop a new, non-work identity. New routines, different social worlds and re-imagined goals are established. Many describe these years as the best of their lives.</p> <h2>What makes a successful retirement?</h2> <p>Research <a href="https://academic.oup.com/workar/article-abstract/2/2/262/2428266?login=false">assessing the strongest predictors</a> of adjustment to and satisfaction with retirement is complex because there are so many potential variables to be measured and controlled.</p> <p>But these are often distilled down to several key factors including physical health, finances, psychological health, leisure activities, and social integration.</p> <p><a href="https://pubmed.ncbi.nlm.nih.gov/21463050/">Studies assessing gender difference</a> in adjustment to retirement are equivocal, but somewhat dated. Nevertheless, <a href="https://www.researchgate.net/publication/228590652_Renegotiating_identity_and_relationships_Men_and_women's_adjustments_to_retirement">many commentators agree</a> women generally have fewer problems adapting socially.</p> <p>Women tend to have stronger non-work networks, are more integrated into their communities and have a more multifaceted sense of identity than those men who define themselves largely in terms of their work.</p> <p>However, the average woman is <a href="https://www.routledge.com/The-Psychology-of-Retirement/Rosenthal-Moore/p/book/9780815347088?srsltid=AfmBOoo--YAKvrHK8gDkQ0Cd1qI7A0PHOjgEZ-VqzDRAJb4KvEt5eMpt">less financially prepared</a> for retirement than a man as a result of taking time off work for children or other caring responsibilities. Women also dominate many of the lower paid jobs.</p> <p>But for both sexes, <a href="https://academic.oup.com/workar/article-abstract/2/2/262/2428266">studies indicate</a> pre-retirement planning helps ensure a secure retirement.</p> <h2>Work out what’s important</h2> <p>Money isn’t everything. Lifestyle planning including post-retirement activities, new roles and interests,prioritising mental and physical health and maintaining your social contacts are also vital aspects of a workforce exit strategy.</p> <p>How are you planning to stay mentally stimulated? What strategies do you have in place to manage stress and maintain good physical health? And what about friendships? Loneliness is being <a href="https://www.mja.com.au/journal/2024/221/6/loneliness-epidemic-holistic-view-its-health-and-economic-implications-older-age">described as an “epidemic”</a> among the elderly, especially those without a partner.</p> <p>How will you build a new social life that may include but does not rely on former work colleagues? How will you negotiate a family life that keeps you connected without becoming a domestic slave?</p> <h2>A well-planned retirement</h2> <p>Retirement has the potential to be a wonderful phase of life in which it is possible to strengthen relationships and achieve goals that you didn’t have time for in your middle years when you were consolidating your career and home life.</p> <p>It’s a time to live out some of your dreams, work through a bucket list perhaps, and have some fun as well as planning what sort of legacy you will leave for future generations.</p> <p>What’s the secret? In short, plan your finances, maintain a healthy lifestyle, stay socially integrated, challenge yourself mentally, stay positive and be flexible.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/241265/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><a href="https://theconversation.com/profiles/susan-moore-1446031"><em>Susan Moore</em></a><em>, Emeritus Professor, Faculty of Health, Arts and Design, <a href="https://theconversation.com/institutions/swinburne-university-of-technology-767">Swinburne University of Technology</a></em></p> <p><em>Image credits: Shutterstock </em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/is-this-all-there-is-retirement-can-be-a-painful-transition-if-we-dont-adjust-our-thinking-241265">original article</a>.</em></p> </div>

Retirement Life

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How much do you need to retire? It’s probably a lot less than you think

<div class="theconversation-article-body"> <p><em><a href="https://theconversation.com/profiles/brendan-coates-154644">Brendan Coates</a>, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a> and <a href="https://theconversation.com/profiles/joey-moloney-1334959">Joey Moloney</a>, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a></em></p> <p>How much do you need to save for a comfortable retirement?</p> <p>It’s a big question, and you’ll often hear <a href="https://www.google.com/search?q=australians+not+saving+enough+for+retirement&amp;oq=australians+not+saving+enough+for+retirement&amp;gs_lcrp=EgZjaHJvbWUyBggAEEUYOdIBCDM4MjRqMGo3qAIAsAIA&amp;sourceid=chrome&amp;ie=UTF-8">dire warnings</a> you don’t have enough.</p> <p>But for most Australians, it’s a lot less than you might think.</p> <h2>You spend less in retirement</h2> <p>Australians tend to overestimate how much they need in retirement.</p> <p>Retirees don’t have work-related expenses and have more time to do things for themselves.</p> <p>And retirees, especially pensioners, benefit from discounts on council rates, electricity, medicines, and other benefits worth thousands of dollars a year.</p> <p>While housing <a href="https://grattan.edu.au/news/the-great-australian-nightmare/">is becoming less affordable</a>, most retirees own their own home and have paid it off by the time they retire.</p> <p>Australians who own their home spend an average of 20–25% of their income on housing while working, largely to pay the mortgage.</p> <p>But that falls to just 5% among retiree homeowners, because they are just left with smaller things such as rates and insurance.</p> <figure class="align-center zoomable"><a href="https://images.theconversation.com/files/631962/original/file-20241114-15-9h1dzt.png?ixlib=rb-4.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/631962/original/file-20241114-15-9h1dzt.png?ixlib=rb-4.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px" srcset="https://images.theconversation.com/files/631962/original/file-20241114-15-9h1dzt.png?ixlib=rb-4.1.0&amp;q=45&amp;auto=format&amp;w=600&amp;h=337&amp;fit=crop&amp;dpr=1 600w, https://images.theconversation.com/files/631962/original/file-20241114-15-9h1dzt.png?ixlib=rb-4.1.0&amp;q=30&amp;auto=format&amp;w=600&amp;h=337&amp;fit=crop&amp;dpr=2 1200w, https://images.theconversation.com/files/631962/original/file-20241114-15-9h1dzt.png?ixlib=rb-4.1.0&amp;q=15&amp;auto=format&amp;w=600&amp;h=337&amp;fit=crop&amp;dpr=3 1800w, https://images.theconversation.com/files/631962/original/file-20241114-15-9h1dzt.png?ixlib=rb-4.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;h=424&amp;fit=crop&amp;dpr=1 754w, https://images.theconversation.com/files/631962/original/file-20241114-15-9h1dzt.png?ixlib=rb-4.1.0&amp;q=30&amp;auto=format&amp;w=754&amp;h=424&amp;fit=crop&amp;dpr=2 1508w, https://images.theconversation.com/files/631962/original/file-20241114-15-9h1dzt.png?ixlib=rb-4.1.0&amp;q=15&amp;auto=format&amp;w=754&amp;h=424&amp;fit=crop&amp;dpr=3 2262w" alt="Notes: Housing costs include mortgage interest and principal repayments and general rates for homeowners, and rental payments for renters. Does not include imputed rent.:" /></a><figcaption><span class="caption">Notes: Housing costs include mortgage interest and principal repayments and general rates for homeowners, and rental payments for renters. Does not include imputed rent.</span> <span class="attribution"><span class="source">Grattan analysis of ABS (2022) Survey of Income and Housing.</span></span></figcaption></figure> <p>And whatever the income you need at the start of your retirement, it typically falls as you age.</p> <p>Retirees tend to spend 15–20% less at age 90 <a href="https://theconversation.com/why-we-should-worry-less-about-retirement-and-leave-super-at-9-5-106237">than they do at age 70</a>, after adjusting for inflation, as their health deteriorates and their discretionary spending falls.</p> <p>Most of their health and aged-care costs <a href="https://grattan.edu.au/report/money-in-retirement/">are covered by government</a>.</p> <h2>So how much superannuation do you need?</h2> <p>Consumer group Super Consumers Australia has crunched the numbers on retiree spending and presents three robust “<a href="https://superconsumers.com.au/journalism/how-much-do-you-need-to-save-for-your-retirement/">budget standards</a>”:</p> <ul> <li>a “low” standard (that is, enough for a person who wants to spend more than what 30% of retirees do)</li> <li>a “medium” standard (spending more than 50% of retirees do), and</li> <li>a “high” standard (more than 70%).</li> </ul> <figure class="align-center zoomable"><a href="https://images.theconversation.com/files/631963/original/file-20241114-19-9h1dzt.png?ixlib=rb-4.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/631963/original/file-20241114-19-9h1dzt.png?ixlib=rb-4.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px" srcset="https://images.theconversation.com/files/631963/original/file-20241114-19-9h1dzt.png?ixlib=rb-4.1.0&amp;q=45&amp;auto=format&amp;w=600&amp;h=337&amp;fit=crop&amp;dpr=1 600w, https://images.theconversation.com/files/631963/original/file-20241114-19-9h1dzt.png?ixlib=rb-4.1.0&amp;q=30&amp;auto=format&amp;w=600&amp;h=337&amp;fit=crop&amp;dpr=2 1200w, https://images.theconversation.com/files/631963/original/file-20241114-19-9h1dzt.png?ixlib=rb-4.1.0&amp;q=15&amp;auto=format&amp;w=600&amp;h=337&amp;fit=crop&amp;dpr=3 1800w, https://images.theconversation.com/files/631963/original/file-20241114-19-9h1dzt.png?ixlib=rb-4.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;h=424&amp;fit=crop&amp;dpr=1 754w, https://images.theconversation.com/files/631963/original/file-20241114-19-9h1dzt.png?ixlib=rb-4.1.0&amp;q=30&amp;auto=format&amp;w=754&amp;h=424&amp;fit=crop&amp;dpr=2 1508w, https://images.theconversation.com/files/631963/original/file-20241114-19-9h1dzt.png?ixlib=rb-4.1.0&amp;q=15&amp;auto=format&amp;w=754&amp;h=424&amp;fit=crop&amp;dpr=3 2262w" alt="" /></a><figcaption><span class="caption">How much super do you need?</span> <span class="attribution"><span class="source">Super Consumers Australia (2023) Retirement Savings Targets</span></span></figcaption></figure> <p>Crucially, these estimates account for the significant role of the <a href="https://www.servicesaustralia.gov.au/how-much-age-pension-you-can-get?context=22526">Age Pension</a> in the retirement income of many Australians. The <a href="https://www.servicesaustralia.gov.au/how-much-age-pension-you-can-get?context=22526">maximum Age Pension</a> is now A$30,000 a year for singles, and $45,000 a year for couples.</p> <p>To meet Super Consumers Australia’s “medium” retirement standard, a single homeowner needs to have saved only $279,000 in super by age 65 to be able to spend $41,000 a year. A couple needs only $371,000 in super between them to spend $60,000 a year.</p> <p>To meet their “low” standard – which still enables you to spend more than 30% of retirees – single Australians need $76,000 in super at retirement, and couples $95,000 (while also qualifying for a full Age Pension of $30,000 a year).</p> <p>That’s provided that you own your own home (more on that later).</p> <h2>Ignore the super lobby’s estimates</h2> <p>Australians should ignore <a href="https://www.superannuation.asn.au/resources/retirement-standard/">the retirement standards</a> produced by super lobby group the Association of Superannuation Funds of Australia.</p> <p>Their “<a href="https://www.superannuation.asn.au/resources/retirement-standard/">comfortable</a>” standard assumes retirees need an annual income of $52,085 as a single, and $73,337 as a couple. This would require a super balance of $595,000 for a single person, and $690,000 for a couple.</p> <p>But this is a standard of living most Australians don’t have before retirement.</p> <p>It is higher than what 80% of single working Australians, and 70% of couples, <a href="https://insidestory.org.au/the-reassuring-truth-about-retirement-incomes/">spend today</a>.</p> <p>For most Australians, saving enough to meet the super lobby’s “comfortable” standard in retirement can only come by being uncomfortable during their working life.</p> <h2>Most Australians are on track for a comfortable retirement</h2> <p>The good news is most Australians are on track.</p> <p>The federal government’s <a href="https://treasury.gov.au/sites/default/files/2021-02/p2020-100554-udcomplete-report.pdf">2020 Retirement Income Review</a> concludes most future Australian retirees can expect an adequate retirement, replacing a more-than-reasonable share of their pre-retirement earnings – more than the 65–75% benchmark nominated by the review.</p> <p>Even most Australians who work part-time or have broken work histories will hit this benchmark.</p> <p>Most retirees today feel more comfortable financially than younger Australians. And typically, they have enough money to sustain the same, or a higher, living standard in retirement than they had when working.</p> <h2>Rising mortgage debt doesn’t change this story</h2> <p>More Australians are retiring with mortgage debt – about 13% of over-65s had a mortgage in 2019–20, <a href="https://www.ahuri.edu.au/sites/default/files/migration/documents/AHURI_RAP_Issue_176_Housing-equity-withdrawal-in-Australia.pdf">up from 4% in 2002–03</a>.</p> <p>But the government’s <a href="https://treasury.gov.au/sites/default/files/2021-02/p2020-100554-udcomplete-report.pdf">retirement income review</a> found most retirees who used $100,000 of their super to pay off the mortgage when they retire would still have an adequate retirement income.</p> <p>This is, in part, because many would qualify for more Age Pension after using a big chunk of super to pay off the mortgage.</p> <p>And retirees can get a loan via the government’s <a href="https://www.servicesaustralia.gov.au/home-equity-access-scheme">Home Equity Access Scheme</a> to draw equity out of their home up to a maximum value of 150% of the Age Pension, or $45,000 a year, irrespective of how much Age Pension you are eligible for.</p> <p>The outstanding debt accrues with interest, which the government recovers when the property is sold, or from the borrower’s estate when they die, reducing the size of the inheritance that goes to the kids.</p> <h2>But what about renters?</h2> <p>One group of Australians is not on track for a comfortable retirement: those who don’t own a home and must keep paying rent in retirement.</p> <p>Nearly half of retired renters <a href="https://grattan.edu.au/news/repairing-australias-retirement-income-system/">live in poverty today</a>.</p> <p>Most Australians approaching retirement own their own homes today, but fewer will do so in future.</p> <p>Among the poorest 40% of 45–54-year-olds, just 53% own their home today, <a href="https://grattan.edu.au/news/the-great-australian-nightmare/">down from 71% four decades ago</a>.</p> <p>But a single retiree renting a unit for $330 a week – cheaper than 80% of the one-bedroom units across all capital cities – would need an extra $200,000 in super, in addition to Commonwealth Rent Assistance (according to the government’s <a href="https://moneysmart.gov.au/retirement-income/retirement-planner">Money Smart Retirement Planner</a>).</p> <p>This is why raising Commonwealth Rent Assistance to help renting retirees keep a roof over their heads should be an urgent priority for the federal government.</p> <p>Australians have been told for decades that they’re not saving enough for retirement. But the vast majority of retirees today and in future are likely to be financially comfortable.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/243596/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><a href="https://theconversation.com/profiles/brendan-coates-154644"><em>Brendan Coates</em></a><em>, Program Director, Economic Policy, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a> and <a href="https://theconversation.com/profiles/joey-moloney-1334959">Joey Moloney</a>, Deputy Program Director, Housing and Economic Security, <a href="https://theconversation.com/institutions/grattan-institute-1168">Grattan Institute</a></em></p> <p><em>Image credits: Shutterstock</em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/how-much-do-you-need-to-retire-its-probably-a-lot-less-than-you-think-243596">original article</a>.</em></p> </div>

Retirement Income

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5 retirement derailers and how to avoid them

<p>Retirement is often called our “golden years”, the time we can enjoy the fruits of our working lives. Not everything goes to plan, and five particular issues can derail even the best laid retirement plans – regardless of whether they hit before or post retirement.  Avoiding the worst effects involves preparing for the worst and hoping for the best.</p> <p>Remember that good retirement planning involves impartial advice to identify risks, and strategies to address them, that you may not have considered. So, check in with your financial adviser, accountant and family lawyer to ensure you have all your bases covered.</p> <p><strong>#1. Relationship breakdowns</strong></p> <p>Separations and divorces see you shift from two incomes to one, joint assets are split (potentially even sold), and acrimonious splits result in costly legal battles.  Furthermore, elder abuse affects one in six older Australians, the Australian Institute of Health and Welfare notes. Adult children, siblings and close friends are among the perpetrators. This could involve financial, physical, emotional or other forms of abuse and control.</p> <p><span style="text-decoration: underline;"><em>Solution:</em></span> Maintain financial independence. Not everything has to be shared – it is good to have your own income, savings, superannuation and investments in addition to joint assets. A prenuptial agreement helps by outlining what each partner came into the relationship with.</p> <p>Open communication is crucial, as is active participation in financial decisions – two pairs of eyes are better than one. Keep super beneficiaries updated. I’ve seen people unwittingly gift their ex their super, leaving their current partner with nothing, because these details weren’t updated post-separation. </p> <p><strong>#2. Partner’s premature death </strong></p> <p>Sudden deaths from an accident, illness, natural disaster, crime or other unforeseen cause not only take someone before their time, but can cripple those left behind. This is especially true where the departed was the primary or sole breadwinner, often forcing their partner to retire much later.</p> <p><span style="text-decoration: underline;"><em>Solution:</em></span> Don’t stick your head in the sand. Expect the unexpected and plan accordingly. Life insurance is perhaps the most obvious form of protection here. It can be taken out within your super, so it needn’t touch your everyday finances.Ensure everyone’s wills and estate planning are up-to-date and accessible, saving valuable time to finalise estate transfers and financial access for surviving beneficiaries.</p> <p><strong>#3. Chronic health problem</strong></p> <p>Whether it’s cancer, dementia (especially early on-set), or any other chronic condition, the problem here (over and above your health) is two-fold: healthcare costs suddenly soar, while ability to earn an income ceases – temporarily or permanently. You may even be forced into early retirement, draining your nest egg earlier than planned – doubly so if your partner also must retire to care for you.</p> <p><span style="text-decoration: underline;"><em>Solution:</em></span> Have a plan B. Fallback options are invaluable, such as health insurance to offset medical costs and an emergency fund for paying bills while undergoing treatment. Don’t sell investments unless you absolutely have to – they can generate passive income now while offering longer-term capital growth.</p> <p><strong>#4. Major financial setback</strong></p> <p>Financial setbacks have numerous causes – natural disasters, scams, business failures, investment losses, gambling addictions. However. the results are often the same – financial stress and delayed retirement.</p> <p><span style="text-decoration: underline;"><em>Solution:</em></span> Act quickly. Of course, prevention is best, but not everything is preventable. If you do suffer a major setback, fast and decisive action is crucial – both to stem the losses and put your recovery into action ASAP. See what can be recovered. Banks can put a stop on withdrawals and cards. Revisit protections, such as insurances and back-up plans. </p> <p>Emergency grants and assistance are offered by governments and charities during disasters.  Get support – financial setbacks are stressful. Don’t compound the pain by letting your mental and physical health slide.</p> <p><strong>#5. Insecure housing</strong></p> <p>We all know the rental market is tight. It’s even harder for those in retirement: landlords prioritise tenants in paid employment; rents consume a larger share of retirement income than home ownership. Then there are ownership considerations: joint tenants versus tenants in common. If your partner dies, will you automatically inherit ownership or be forced to move?</p> <p><span style="text-decoration: underline;"><em>Solution:</em></span> Do your best to get on the property ladder.  That may require some creative thinking. Consider cheaper markets from where you live; entry-level “renovator’s delights” to improve over time; pooling funds to buy jointly with trusted family or friends. Even if you rent out the property, you have the option to move in should you find yourself otherwise homeless.</p> <p>Plus, you have a stable investment over and above your super. Also, consider ongoing maintenance costs and tax implications. Owning or inheriting a property is counterproductive if you can’t afford its upkeep or mortgage repayments.</p> <p><em><strong>Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a></strong></em></p> <p><em><strong>Image credits: Shutterstock</strong></em></p>

Money & Banking

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NRL legend explains why he's retiring after 33 years

<p>NRL legend Paul Vautin has revealed the exact moment he knew his time on-air was over, just days after announcing his retirement. </p> <p>The 65-year-old shocked the sports world on Sunday when he confirmed his career on TV was coming to an end, saying he's "run out of petrol” and would not be continuing with his job with Channel 9 into 2025. </p> <p>Speaking candidly in the days after the shock announcement, Vautin - who has affectionally been known as Fatty during his career - detailed the exact moment he realised it was time to walk away.</p> <p>“Something changed this year. I’d be driving up in three hours of traffic on a Friday afternoon going ‘oh my god what am I doing?’” he said on SEN’s <em>The Run Home with Joel and Fletch</em>.</p> <p>“In the end I just felt as though I’d rather be at home watching the footy on a Friday night than working on it. I still love the game immensely but I just thought ‘you know what I think I’m done’."</p> <p> </p> <p>“There was one particular moment when the Brisbane Broncos were playing the Roosters on a Friday night at Suncorp and look it was a pretty good game, I was commentating with Joey and we were having a good time."</p> <p>“Then 20 minutes into the second half I was looking out at the field going, ‘Oh my god I am so bored’. I drove home thinking wow that had never happened before and I knew then it was the beginning of the end.”</p> <p>While fans are hopeful the NRL icon will reverse his decision and return to commentary, the 65-year-old says he has no intention of working again.</p> <p>“I’ll let you in on a little secret. I will never work again. I’m done. I’m not looking for work,” Vautin said.</p> <p>“No way. I don’t want to do anything. I don’t want to do radio, podcasts. I don’t want to do anything. I’m happy.”</p> <p><em>Image credits: Nine/SplashNews.com/Shutterstock Editorial</em></p>

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"You made me enjoy the game": Federer's emotional retirement letter to Nadal

<p>Roger Federer has penned an emotional tribute to Rafael Nadal ahead of his retirement, reflecting on their stellar careers together. </p> <p>Nadal’s career officially came to an end when Spain was defeated 2-1 by the Netherlands in the Davis Cup quarter-final in Malaga on Wednesday morning, with Nadal in tears as he stepped onto the court for the final time. </p> <p>Thousands of tributes poured in for Nadal as his retirement officially began, but Federer's tribute quickly went viral for his emotional words.</p> <p>“As you get ready to graduate from tennis, I’ve got a few things to share before I maybe get emotional,” Federer said. </p> <p>“Let’s start with the obvious: you beat me - a lot. More than I managed to beat you. You challenged me in ways no one else could. On clay, it felt like I was stepping into your backyard, and you made me work harder than I ever thought I could just to hold my ground."</p> <p>“You made me reimagine my game - even going so far as to change the size of my racquet head, hoping for any edge. I’m not a very superstitious person, but you took it to the next level. Your whole process. All those rituals."</p> <p>“Assembling your water bottles like toy soldiers in formation, fixing your hair, adjusting your underwear … All of it with the highest intensity. Secretly, I kind of loved the whole thing. Because it was so unique - it was so you."</p> <p>“And you know what, Rafa, you made me enjoy the game even more. OK, maybe not at first. After the 2004 Australian Open, I achieved the No. 1 ranking for the first time. I thought I was on top of the world. And I was - until two months later, when you walked on the court in Miami in your red sleeveless shirt, showing off those biceps, and you beat me convincingly."</p> <p>"All that buzz I’d been hearing about you - about this amazing young player from Mallorca, a generational talent, probably going to win a major someday - it wasn’t just hype."</p> <p>“We were both at the start of our journey and it’s one we ended up taking together. Twenty years later, Rafa, I have to say: What an incredible run you’ve had. Including 14 French Opens - historic! You made Spain proud … you made the whole tennis world proud."</p> <p>“And then there was London – the Laver Cup in 2022. My final match. It meant everything to me that you were there by my side – not as my rival but as my doubles partner."</p> <p>“Sharing the court with you that night, and sharing those tears, will forever be one of the most special moments of my career.”</p> <p>Federer signed off the 585-word tribute from “your fan Roger”.</p> <p><em>Image credits: ANDY RAIN/EPA-EFE/Shutterstock Editorial </em></p>

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Hollywood icon reveals plans for retirement

<p>Denzel Washington has revealed that he is going to retire after his next batch of films. </p> <p>The Hollywood icon appeared via videolink on Tuesday’s episode of the <em>Today Show</em>, alongside his co-stars to promote his new film <em>Gladiator II</em>.</p> <p>“I don’t know how many more films I’m going to make. Probably not that many,” the actor, who turns 70 next month, told <em>Today</em> host Richard Wilkins. </p> <p>“I want to do things I haven’t done. I’ve played Othello at 22, I’m about to play Othello at 70,” he said.</p> <p>Denzel will play the role in the Shakespeare play on Broadway alongside Jake Gyllenhaal from February next year.</p> <p>“After that I’m playing Hannibal. After that I’ve been talking with Steve McQueen about a film. After that Ryan Coogler’s writing a part for me in the next <em>Black Panther.</em>”</p> <p>He added, “After that I’m going to do the film Othello. After that I’m going to do King Lear. After that I’m going to retire.”</p> <p>Based on the interview, the actor has six upcoming projects across stage and film, so fans will still get to enjoy a few more of his roles before he retires, following a career that has spanned almost 50 years. </p> <p>Speaking to <em>news.com.au</em>, the actor offered some insight into why he is planning to retire, saying that there are “less and less challenges”, after previously revealing that at this point in his career, there are very few roles he is willing to take. </p> <p><em>Image: Masatoshi Okauchi/ Shutterstock Editorial</em></p> <p> </p>

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I spoke to 100 Japanese seniors, and learnt the secret to a good retirement is a good working life

<div class="theconversation-article-body"> <p><em><a href="https://theconversation.com/profiles/shiori-shakuto-1537774">Shiori Shakuto</a>, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a></em></p> <p>What makes a good retirement? I’ve <a href="https://www.pennpress.org/9781512827088/after-work/">been researching</a> the lives of “silver backpackers”: Japanese seniors who embark on a later-life journey of self-discovery.</p> <p>Many experienced Japan’s high-growth economy, characterised by rigid gender roles. For many men who worked as iconic cultural figures of <em><a href="https://en.wikipedia.org/wiki/Salaryman">sarariiman</a></em> (white collar workers), excessive working hours were normalised and expected. Their absence from home was compensated by their female partners, many full-time stay-at-home mothers.</p> <p>Entering their 60s meant either retirement from work, or children leaving home. For men and women, retirement is understood as an opportunity to live a life for themselves, leading to a journey of self-discovery.</p> <h2>Dedicating life to work</h2> <p>I interviewed more than 100 older Japanese women and men and found a significant disparity in the quality of life between them.</p> <p>Japanese retired men who led a work-oriented life struggled to find meaning at the initial stages of retirement.</p> <p>One man I spoke to retired at the age of 60 from a large trading company. He was a successful businessman, having travelled the world and held various managerial positions in the company. His wife looked after the children most of the time.</p> <p>They bought a house with a yard in a suburb so the children could attend a good school. It significantly increased his commute, and further reduced his time with children. He also worked on weekends. He barely had time to develop his hobbies or get to know his neighbours.</p> <p>He idealised his retirement as a time to finally spend with his family and develop his own hobbies. When he retired, however, he realised that he and his family didn’t have any common topics of conversation.</p> <p>Through decades of excessive hours spent at work away from home, the rest of the family established a routine that did not include him. Taking up new hobbies at the age of 60 was not as easy as he thought, nor was making new friends at this age.</p> <p>“I became a <em>nureochiba</em>,” he lamented. <em>Nureochiba</em> refers to the wet fallen leaves that linger and are difficult to get rid of. The term is commonly used to describe retired men with no friends or hobbies who constantly accompany their wives.</p> <p>The retirement for many former <em>sarariiman</em> was characterised by boredom – having nowhere to go to or having nothing to do. The sense of boredom led to a sense of isolation and low confidence in old age. Many older Japanese men I spoke to lament not having built a connection with their children or communities at a younger age.</p> <h2>Dedicating life to family and community</h2> <p>Older Japanese women I spoke with were more well-connected with their children and local communities in later life. Many were in regular contact with their children through visits, phone calls and messages. Some continued to care for them by providing food or by looking after grandchildren. Children very much appreciated them.</p> <p>Many older women who had been full-time stay-at-home mothers had already taken up hobbies or volunteering activities at community organisations, and they could accelerate these involvements in their old age.</p> <p>Even women who worked full-time seemed to maintain better connections with their family members because working excessively away from home was simply not possible for them.</p> <p>Older men relied on these women’s networks and activities conducted at the scales of home and communities – from caring for others to pursuing hobbies – to enact a meaningful retirement. The sense of connection with family and communities, not to mention their husbands’ reliance on them, led to a high confidence and wellbeing among older women.</p> <p>I saw many instances where older women preferred spending time with their female friends than their retired husbands and embarked on adventurous trips alone. One woman went on a three-month cruise alone. Feeling liberated, she sent a fax message to her husband from the ship: “When I get off this ship, I will devote the rest of my life to myself. You will have to take care of your own mother.”</p> <p>Upon disembarking, she moved to Malaysia to start her second life.</p> <h2>The silver backpackers</h2> <p>Malaysia has become a popular destination for silver backpackers looking to embark on a journey of self-discovery. Some travel as couples, while others go alone, regardless of their marital status.</p> <p>For many male silver backpackers I spoke to, moving to Malaysia offers a second chance at life to make new friends, find hobbies and, most importantly, start anew with their partners.</p> <p>For many female silver backpackers, visiting Malaysia means being able to enjoy an independent lifestyle while having the security of friends and family in Malaysia and Japan.</p> <p>The experiences of older Japanese men and women can be translated into the experiences of anyone who spent excessive hours at work and those who spent more time cultivating relationships outside of work. The activities of the latter group are not as valued in a society that narrowly defines productivity. However, my research shows that it is their activities that carry more value in old age.</p> <p>Are you under pressure to work long hours? If you can, turn off your phone and computer. Instead of organising events for work, organise a dinner with your family and friends. Take up a new hobby in your local community centres. You can change how you work and live now for a better old age.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/238571/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><a href="https://theconversation.com/profiles/shiori-shakuto-1537774"><em>Shiori Shakuto</em></a><em>, Lecturer in Anthropology, <a href="https://theconversation.com/institutions/university-of-sydney-841">University of Sydney</a></em></p> <p><em>Image credits: Shutterstock </em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/i-spoke-to-100-japanese-seniors-and-learnt-the-secret-to-a-good-retirement-is-a-good-working-life-238571">original article</a>.</em></p> </div>

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"The time has come": Ray Hadley announces retirement

<p>After 43 years on air, Ray Hadley has announced he will be stepping back from his hosting role at 2GB. </p> <p>Hadley shocked his loyal listeners on Thursday morning, saying his extensive career has been "one hell of a ride". </p> <p>“It’s been a hell of a ride from a young bloke who wanted to call the races," he said. "But the time has come for someone else to do the job. So December 13 will be my last day broadcasting."</p> <p>“Apparently the story has broken somewhere. There’s always a leak somewhere, so I may as well do it now, earlier than I anticipated,” he said.</p> <p>“Sometimes you can’t keep things secret, and I suppose in the media, that’s what happens."</p> <p>“I’ve achieved far more than I ever thought I would. My children, Dan, Laura, Emma and Sarah, have made sacrifices over the years for me to realise my ambitions."</p> <p>"Back in September I turned 70, I started to think, how long I've got left on this Earth, and do I want to keep getting up at half past three in the morning, meaning I go to bed early. At social events I'm always the first out the door. I don't want to be the first out the door anymore."</p> <p>Hadley assured listeners he would not be disappearing completely, clarifying, "I'm not retiring from work. I'm just retiring from full-time radio. I'll bob up somewhere in 2025 but not in a full-time capacity, and certainly not on radio." </p> <p>Shortly after making the on-air announcement, NSW premier Chris Minns called into the show to share a tribute. </p> <p>“Ray, you shocked us all. What a massive day in New South Wales radio, and a huge loss for Sydney in particular," Mr Minns said.</p> <p>“We’re genuinely going to miss you. I’m in shock at the moment. It’s a distinguished career. It’s an incredible legacy. But if I was someone up in one word, I would just say fearless, a broadcasting career that’s been completely fearless, and you’ve never, ever pulled your punches in something that you believe in."</p> <p><em>Image credits: Instagram </em></p>

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Readers response: What’s one thing you wish you had known before retiring?

<p>When it comes time to retire, there are always things we wish we knew first before entering our golden years. </p> <p>We asked our readers what they wish they knew before retiring, and the response was overwhelming. Here's what they said. </p> <p><strong>Margaret Walsh</strong> - As long as you are fit and active, it's great. Just don't get crook or disabled, it sucks.</p> <p><strong>Judi Bradshaw</strong> - I retired 9 times and kept going back to work as I didn't find myself ready to stop work, but finally retired at 73. Took awhile to adjust but now 75 and full time travellers, just loving life.</p> <p><strong>Marcus von Moger</strong> - How good it was going to be.</p> <p><strong>Chris Bailey</strong> - How boring it is, I’d go back to work in a heartbeat if I could.</p> <p><strong>Ellen Fowler</strong> - That the government would keep changing the rules. </p> <p><strong>Michael L Carrigg</strong> - Just how long it takes dealing with government departments that clearly are understaffed, especially in the front line service areas.</p> <p><strong>Jim Burgess</strong> - Finding reasonably priced accommodation.</p> <p><strong>Nicol Kyriakidou</strong> - That it would be so great! Having the whole day to yourself. Taking it easy, meeting friends, going shopping. Doing everything at your leisure.</p> <p><strong>Gaye Johnson</strong> - You never get a day off!!!</p> <p><strong>David Brown</strong> - How good it is. I should have retired 20 years earlier.</p> <p><em>Image credits: Shutterstock </em></p>

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