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We asked 1,002 retirees what they wish they’d known before retiring

·4-min read
Two senior men smile while bending over looking at vegetable patch. Inset: Australian $10 note in nest. Nest egg/retirement concept.
A new report has revealed how Australians really feel about retirement. (Sources: Getty)

Retiring is one of the biggest lifestyle shifts a person will go through, but Australia’s retirees have two clear tips: stay positive and invest in your health.

That’s according to Fidelity research into Australians’ happiness in retirement, and the role of financial security in achieving this.

Fidelity surveyed 1,514 Australians over the age of 50, including 1,002 semi-retired and retired Australians.

Asked what advice they would give others facing retirement, 64 per cent said to “have a positive and optimistic outlook”, with an equal number advising others to invest in their health.

A similar number (61 per cent) called on others facing retirement to remain flexible and adaptable.

More than half (58 per cent) advised others to find their purpose beyond their work, while 55 per cent suggested others take control early, 52 per cent suggested always having a “plan B” and 28 per cent said pre-retirees needed to get expert advice.

“It seems that retirement for many Australians is becoming more of an emotional journey,” Fidelity International head of client solutions and retirement Richard Dinham said.

“Australians who felt they were in control of their retirement decision had more positive emotional outcomes compared to those who were unexpectedly forced into retirement.

“The research also found that life gets better as people move through retirement. Although satisfaction with health declines, people gain more satisfaction in retired life through a sense of community, a sense of control and positive daily experiences.”

It means financial advisers and planners now have to understand the role financial security has in achieving a comfortable retirement, in addition to the social and psychological factors.

Does life get better after we retire?

The study found pre-retirees often had some apprehension about retiring.

They tended to worry more about money, with 40 per cent concerned they were not on the right financial track.

The study found this cohort was also worried about how they would spend their time in retirement, where they would live, and their future care needs.

However, once they actually did retire, life improved, the Fidelity research found.

(Source: Fidelity)
(Source: Fidelity)

“When we compare the life satisfaction of respondents in the various stages of retirement, it appears we all have something to look forward to: life satisfaction generally gets better as we progress through retirement,” the report’s authors noted.

“Although our satisfaction with our health reduces as we age, experienced retirees have the highest satisfaction concerning several other life aspects, specifically: connection with community and family, a sense of control, a high level of confidence, and positive emotional experiences day to day.”

Money woes continue to plague retirees

Wealth continued to post the biggest challenge to life satisfaction, Fidelity found, urging Australians to begin planning for retirement sooner rather than later.

However, Dinham also noted advisers and planners had a role in helping clients understand how to manage their finances and spend the money they had.

The Federal Government’s Retirement Income Review found: “Many people misunderstand the purpose of superannuation, believing that in retirement they should only draw on the return from the investment of their retirement savings and not touch the capital amount.”

That’s despite the system itself being designed on the basis that people would draw down on their savings in addition to their earnings in retirement.

Dinham said planners had a responsibility to bolster clients’ sense of control by using investments and draw-down strategies that were fit for purpose and offered returns above inflation.

“Whilst retirees still need to take some investment risk with their portfolios, fit-for-purpose investments provide exposure to the right kinds of investment risks and, importantly, at the same time help reduce the extent of those investment risks that the client would normally be exposed to,” he said.

“For example, volatile equity markets can actually benefit regular savers by the effect of dollar-cost averaging - some contributions are invested when markets have fallen and the subsequent recovery boosts overall returns.

“However, the opposite effect occurs for retirees with dollar-cost averaging potentially being very harmful, as any capital drawn upon during volatile markets can mean a permanent loss of capital.

“So, to avoid this harmful effect, planners need to use an appropriate framework for investing combined with the right kinds of investments.”

This could include “complex bucketing”, which is an approach to cash-flow that allocates retirees’ savings into different pools for different purposes, with each pool then invested into a specific product based on when the retiree will need to access that pool of money.

For example, money required for a short-term need would be invested into more conservative products and assets, while money required for a long-term need could be invested into more volatile assets and products.

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