Over the last few decades we’ve seen many employees take a package, retire from work and disappear off into the sunset – fishing, golfing, travelling – fulfilling their dreams.
The prospect looks attractive when you reach the right age. But hold on – maybe the working world as we know it has changed. Already there is proof that early retirement may be a thing of the past. Firstly, employers are starting to be concerned about a “skills vacuum” – there won’t be enough working people to keep businesses and the economy prospering.
Access Economics has estimated that in the 2020s, Australians will only produce 125,000 new workers in the entire decade. At present, the workforce grows by 170,000 jobs a year! Who will fill the extra thousands of jobs? Secondly, governments are concerned about affordability – we need more taxpayers to support social security, health and aged care programs. Lastly, some early retirees have realised that there may be more to life than 35 years of fishing and golf!
These issues are not unique to Australia … many developed countries are searching for solutions to exactly the same problems. These solutions are likely to involve a stick and carrot approach. For example, making superannuation inaccessible until age 60, and there have been proposals to increase the age when the pension is payable. With the massive restructuring of the 1980-90s, there is now less scope for employers to offer “retirement” packages. As far as carrots are concerned, some early retirees have recognised the advantages of staying in the workforce by running their own businesses, consulting or contracting out their services. Businesses are looking for more creative employment practices to entice workers to stay on. For example, British Telecom implemented innovative ways to phase their people into retirement:
- Wind Down – working part time
- Step Down – working full time in a job with lower responsibility
- Time Out – taking time off for travel or education before returning to work
- Ease Down – reducing hours of work and responsibility.
It seems like the “employed Friday, retired Monday” syndrome is dying out. Of course there are advantages of phasing into retirement. You keep earning so your retirement savings last longer. Keeping active is better for your health and well-being. More flexible working hours allow time for fishing, golf, travel, grandchildren, study and so on.
Perhaps this can be a case of having your retirement cake and eating it too!
Sources: Access Economics; British Telecom
This article is provided as information only and is not to be taken as financial advice. For any financial advise we recommend you consult a qualified Financial Planner
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