It is no longer viable to accept that life must follow the pattern of full time student followed by full time work to 65 years of age and then followed by full time retirement. 65 is simply the wrong number.
In Australia the old age pension came into being in the early 1900s when the lifespan of an Australian male was approximately 60 years of age. It was originally created to look after someone who lived longer than normal, for a short period of time.
Understandably, as longevity has moved out to around 80 years of age or more, we have come to consider the old age pension as a long term income after employment. But it was never meant to be so.
When superannuation was brought in to replace the pension there was a chance to change the number. The age requirement, however, not only was left at 65 but transition to retirement from 60 was also brought in. Clearly major change is not going to happen quickly as governments cannot make that sort of sweeping change and remain in office, and the industries supporting the notion of 'save in superannuation to 65 and live off what you have' won't bring in the change either.
Individually though, we can change and prepare for our own circumstances. Most people find themselves
- Under time, relationship and finance pressures on a daily basis.
- Sipping on a second glass of wine in the evening when the thought comes, how will I ever have enough at 65 to retire on?
- With the real problem that 65 is the wrong number.
It is a bit like setting off on a sixty-five kilometre walk with enough resources for the journey – only to realise at the 65km mark that you still have up to 35km to finish the journey but very little resources left.
In fact there isn't a specific number that suits all, but a well laid out plan for the next decade can give us options that will allow us to cope with whatever changes we face over the coming decades. And there will be lots of change! To prepare for the extra journey we can carry extra resources (investments), or ensure we are able to produce resources along the way (incomes), or better still do both.
Since running the 'Design Your Next Decade' workshops and the 'Design a Decade' training programs over the last twenty years, we now know that people can set up for a long and enjoyable life by
- Improving their general life management;
- Setting up investments to give them options for the future;
- Maintaining time flexible, enjoyable incomes and getting their number of working days down over time (often well before 65) rather than have a full stop at 65.
Interestingly there are three main stages that people start realising that 65 is the wrong number and their is a need for change:
- Sixty-seven percent of people who come to us for assistance are between their late 20s and early 40s with preteen children – the 'beautiful chaos' has set in.
- Those who have come with teenagers are experiencing that the weight of bringing family through has put high-pressure on life.
- The ones who are at the empty-nest stage often have something already broken in life – unfortunately many times divorce, not enough investments, health not being looked after, and relationships and finances under pressure have caused the break.
Starting from any one of these life circumstances, having a well laid out plan, and maybe someone to walk alongside them to help implement that plan, has helped many people avoid the pressure of 65 being the wrong number.