Are you planning to boost your retirement income by doing some part-time work once you eventually retire? Perhaps you have included the expectation of some paid work in your calculations about how much you need to finance your retirement.
If so, this leads to another question: How realistic is that expectation?
A Vanguard research paper, Retirement transitions in four countries, may help provide some answers.
More than 5560 pre-retirees (who are planning to retire within 10 years) and recent retirees (who retired over the past 10 years) age 55-75 took part in the study covering Australia, the United States, United Kingdom and Canada. This includes 743 Australian pre-retirees and 703 Australian recent retirees.
In short, the researchers wanted to compare the expectations of pre-retirees with the experiences of recent retirees – including in regard to doing some work as a retiree.
Researchers found that pre-retirees were up to four times likely to say they expect to work in retirement compared to the proportion of recent retirees actually working. Consider the findings:
Australia: Pre-retirees expecting to do paid work at least once a week in retirement (42 per cent). Recent retirees actually working at least once a week (11 per cent).
United States: Pre-retirees expecting to do paid work at least once a week in retirement (42 per cent). Recent retirees actually working at least once a week (14 per cent).
United Kingdom: Pre-retirees expecting to do paid work at least once a week in retirement (40 per cent). Recent retirees actually working at least once a week (10 per cent).
Canada: Pre-retirees expecting to do paid work at least once a week in retirement (47 per cent). Recent retirees actually working at least once a week (14 per cent).
These findings raise another question: Why is there this gap between expectations to work in retirement and actually working?
"There are several possible reasons for this difference," the researchers write. "Pre-retirees may feel they need more sources in retirement, and so expect to work.
"It could also be true," they add, "that recent retirees had the same idea [as pre-retirees], but then, upon retiring, realised that the work was no longer necessary in retirement. Pre-retirees may also be overestimating their ability to find suitable work."
Whether retirees do some work much depends on such factors as employment opportunities, health and family obligations – and whether they actually want to do paid work after getting a taste for retirement.
A message is that you should be particularly cautious about counting on part-time work as a retiree to boost your retirement income.
If you seek further assistance on this topic please contact us on (08) 8362 4555
Written by Robin Bowerman, Head of Market Strategy and Communications at Vanguard.
Reproduced with permission of Vanguard Investments Australia Ltd
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients' circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.
© 2017 Vanguard Investments Australia Ltd. All rights reserved.
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author.
Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
Comments are closed.