Retirement is something that most people approach with mixed feelings. On the one hand, it’s nice to relax and finally live the life you’ve worked hard for. On the other hand, waking up in the morning with nothing to do can be depressing—even the mere thought of it.
So, what even is this phenomenon called retirement? Here’s a quick run-down of life after work, and how to make it work for you.
- What is retirement?
- What is retirement in Australia?
- How can you have purpose in retirement?
What is the Definition of Retirement?
Retirement is the period in your life when you decide to permanently leave your job and stop working. This usually comes with retirement benefits such as an age pension and super funds.
Brief History of the Retirement System
The idea of retirement goes back just a century and a half.
Retirement was first introduced by German Chancellor Otto Von Bismark in 1889. It was an attempt to curb the high rates of youth unemployment that existed at the time. The Chancellor’s idea was to create employment for the youth by paying an income to those aged over seventy to leave work. This is developed into a pension. Other countries soon followed this example.
Retirement in Australia
The first national aged pension system in Australia was introduced by the Australian labour Commonwealth government led by Andrew Fisher in 1908 under the Invalid and Old-Aged Pensions Act. It has since evolved into many other facets under the superannuation system.
Now people simply can’t wait to get their hands on their retirement super funds. These funds generally have very favourable tax policies, if any at all.
Current Australian Retirement Statistics
Australia’s retirement age has gradually increased, so that there are about 3.9 million retirees as of 2020. This may be because life expectancy has increased over the last decade.
From 2018-2019, 55% of retirees were women—they’re likely to retire sooner than men, on average.
What is the Australian Retirement Age?
Many people want an early retirement. Although there is no law in Australia that dictates what age you must retire, many people might quit working as soon as they become eligible for their super.
This is also known as the preservation age and is the earliest you can access your super annuity under normal circumstances. According to the Australian Bureau of Statistics, the average retirement age in Australia is about 55-years-old, with the pension as their main retirement income.
Eligibility for super also depends on date of birth. The eligibility age keeps increasing by six months every two years, so your birth month could dictate your eligibility.
What Does Retirement Mean Today?
Today retirement is not a decision to be made lightly. It requires financial expertise and no small amount of planning and preparation. An important tip is to make a retirement plan for your retirement savings.
Take note that there are a number of factors that will influence how much income you will receive in pension funds. This includes how much your employer deposited into your super during your working years.
It’s advisable to leave your retirement savings in the account and avoid withdrawing it all in a lump sum. Why? Money in an account is easier to account for and manage.
On that note, you may need to get financial advice to best manage your retirement savings. You want your savings to serve you well for all the things you want in life after work!
Purpose in retirement
Society has an image of retirees as silver-haired people walking on beaches, going on holidays, and living in retirement villages. That’s great and all, but as human beings it’s still important to have a sense of purpose and social connection in retirement.
Retirement is an ideal time to explore other areas of life. The era we live in offers plenty of opportunities to do this. You might explore your own interests, learn new skills online or in person, offer your own expertise in online courses, volunteer, tutor, or start a business of some kind. The world is your oyster.
Retirement is something to look forward to: hard-earned peace and quiet and a long-awaited rest from daily work stress. It’s a perfect opportunity to explore other avenues of life and create the lifestyle you want.
A stable retirement requires retirement planning even years prior to retirement. This is to ensure that your income serves you well in your retirement.
1. What is the average retirement income in Australia?
According to the Association of Super Funds Australia(ASFA), you need about $44000 per annum if you are single and $62000 per annum if you’re a couple for a comfortable retirement.
2. Is there a compulsory retirement age in Australia?
It is illegal to force a person for retirement in Australia except for a few factors, including permanent members of the Australian Defense Force who must retire at 60 and reservists at 65.
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