Why your retirement intentions are critical
Have you given much thought to the age that you might eventually retire?
Thinking well ahead about possible retirement timing is a fundamental part of financial planning – no matter whether you have spent years in the workforce or have just started your first job.
In short, having an intended retirement date in mind helps us to calculate how much we should regularly save to meet that target.
Fewer people than in the past leave full-time work on a Friday to begin full-time retirement the next day but rather ease their way into retirement, if possible by first switching to part-time work.
Of course, many of us would like to assume that we are in control of the timing and shape of our eventual retirement. Yet things often turn out differently in reality.
The most-recent Retirement and retirement intentions, Australia report, published by the Australian Bureau of Statistic (ABS) in December, provides an insight into our plans for retirement.
Of the 4.9 million people aged 45 and over in the labour force in 2016-17: 79 per cent intend to retire in the future. The remainder either hadn't made up their minds whether to eventually retire or intend never to retire.
Of those who aim to retire:
- 50 per cent intend to retire between 65-69.
- 23 per cent intend to retire between 60 and 64.
- 7 per cent intend to retire between 45 and 59.
The average age for intended retirement is 65. By comparison, "recent retirees" – meaning those who retired over the past five years – had an average retirement age of just under 63.
Robin Bowerman, Head of Market Strategy and Communications at Vanguard.
22 February 2018