About 40 per cent of the nearly half a million people who entered the work force between 2019 and 2022 were over the age of 55. It’s been called the ‘great unretirement’ and you may be part of it – or considering the move.
How much you need to retire, how much you’re likely to spend given inflation and how long you’re likely to live can all combine to make retirement a fraught destination.
But there’s much more to it.
Retirement now compared to that in our parents’ and grandparents’ days is poles apart.
And it’s still in a metamorphosis.
So much changed when COVID hit and that has had a big impact on older Australians’ propensity to retire – and unretire.
We’ve been extending our working lives for decades, largely due to longer life expectancies and, more recently, Age Pension eligibility has been pushed back and will be 67 from 1 July. (No Paris-style riots in Australia.)
But COVID and employers’ attitudes on working from home have also been major drivers of older Australians rejoining the workforce.
According to Australian Bureau of Statistics data, the main reasons for returning to full or part-time work were financial necessity and boredom.
The statistics show 35.2 per cent of people came out of retirement in the 2018-19 financial year due to financial need, 34.8 per cent cited boredom and needing something to do, while 14 per cent said an interesting opportunity came up.
AustralianSuper head of business growth Vicky Maguire says the way people approach retirement has changed radically from previous generations and a fresh approach is needed to support workers who choose to unretire.
She says the Ageing Workforce Ready project is developing a framework to help businesses support older workers.
“Supporting individuals, recruiting experienced workers wanting to return to work after retiring and countering age discrimination in the workplace is a win-win for employees and businesses,” she says. “A key part of the project is focused on how we can improve the skills of managers so they can support workers who are transitioning to retirement or who are deciding to return to work.”
Pros and cons for your finances
If you’re thinking of unretiring, you should spend some time – or seek financial advice – to ensure you understand how extra income can affect your finances – negatively.
If you receive an Age Pension and other government support, be aware of the income thresholds that apply. Unless you’re working for the love of it, there may be little financial gain if you’re trading pension payments for work-related income.
You are also required let Centrelink know you are receiving additional income within 14 days of any changes.
If you enjoy the various health concessions attached to the Commonwealth Seniors Health Card (CSHC), there are income limits there too, though they are generous – assessable income must be below $90,000 for singles and below $144,000 for couples.
You should understand how the Work Bonus interacts with the pension.
This allows Australians receiving an Age Pension to work without penalty – but there is a cap on earnings. Until 31 December 2023, a single pensioner with no savings could earn up to $17,000 without impacting the pension and a couple as much as $32,000 (if both work part time up to the limit).
National Seniors Australia (and others) are lobbying the federal government for a change to this policy, which it sees as a severe disincentive to returning to the workforce. It wants the income-free threshold, currently capped at $480 a fortnight, lifted.
You may need to review your superannuation set-up. Assuming you have super in pension phase, you will still be required to make the minimum drawdown. That, combined with salary, could push you into a higher tax bracket and/or affect pension payments.
If you retired and accessed your super after the age of 65, then a return to work has no impact.
But if you accessed your super when you reached preservation age, ceased ‘gainful employment’ and declared that you have no intention of returning to work, then returning to work is a little more complicated.
If you want to return to part-time work (between 10 and 30 hours a week) or full time (over 30 hours a week), you’ll need to explain to the Australian Taxation Office (ATO) that your conditions have changed but that it was your intention to retire when you signed the declaration.
Pros and cons for your health and wellbeing
Many older Australians are pushing back the age they intend to retire – or returning to work – because we’re healthier, living longer and happy to stay involved. The working from home revolution has also made an extended work life or a return that much easier.
You may have retired, enjoyed ticking off some bucket list items, sleeping in, reading and gardening. But … now you’re bored.
Retirees can find it hard to adjust and still have a purpose in life, says Nick Bruining, financial planner and director of Bruining Partners.
“People underestimate the psychological impact of retiring,” he says. “Many people enjoyed what they were doing and the status it brings. Being a doctor, accountant, lawyer or teacher has a lot more status than ‘retiree’.”
So assuming you’re healthy and ‘work’ does not mean digging a ditch or lopping trees, work can be a boon to wellbeing and mental stimulation. Just be sure to consider the potential physical and mental health challenges in making a return to work.
Can you make that return gradually and work part-time only?
Do you still have the skills to fill the role you prefer?
Have you considered volunteering instead of returning to work?
Will ageism be an issue? In 2021, 17 per cent of more than 600 business leaders surveyed by the Human Rights Commission and Australian HR Institute classified 51 to 55-year-olds as ‘older’, compared with 11 per cent in 2018. The war on ageism is ongoing.
Colin Lewis, head of strategic advice at Fitzpatricks Private Wealth, adds that changed circumstances can make unretiring a necessity or simply more attractive. “They often retire and then find that they either need the stimulation or that they need more funds to live off, and re-enter the workforce,” he says.
The bottom line? Keep your options open, follow your heart – and head – and enjoy life.
Have you ‘unretired’? Tell us why and the hurdles – or lack of them – that you had to overcome? Are you happy? Share your experience in the comments section below.
Also read: Push to make retirees withdraw more of their super every year
Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.
