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Longevity is ‘changing’ people’s expectations about retirement

People’s goals after full-time work ends vary greatly. The challenge for super funds and advisers is to acknowledge these differing ambitions and find the financial and emotional solutions to meet them.

The accepted wisdom was that as people approached their 60s, they started thinking about retirement – the opportunity to fulfil those ambitions that had been put on hold by full-time work and raising a family.

The underlying assumption was that these ambitions would be family, especially grandchildren, travel, recreational or sporting, anything, in fact, except work. 

But Craig Keary (pictured), CEO of the fintech trading platform Selfwealth, believes retirement is becoming far more flexible, and that people, on reaching this milestone, will be increasingly looking to extend their working lives.

  • “What we will see is more people not only looking to continue working but actually find fresh careers. It just won’t be a financial necessity, although that will be the motivating factor for some, but the fact they will simply want to remain in the workforce, that the idea of retiring in their mid-60s simply has no appeal.

    “Take Bunnings, for example. They’ve hired people who were retired to work on the floor. It’s a very successful model for them because they find customers are more likely to seek advice on DIY stuff from somebody that’s older. So, it’s a win-win. Customers are getting better service and Bunnings have a highly engaged workforce.” [Thirty per cent of Bunnings’ store workforce are aged over 50 and 14 per cent are over 60.]

    The prime driver behind this change is longevity. People in their mid-60s understand they have two, possibly three decades, of healthy living ahead of them and are reluctant, even fearful of stopping work. Although it may not be full-time, work will still fill part of their week.

    For the superannuation industry and the advisory sector, this is going to pose fresh challenges. Quite simply, there won’t be a one-size-fits-all solution, and those advising the estimated 130,000 people who retire annually will need to recognise the need to be flexible.

    Keary says for those people wanting personal advice, there’s no doubt cost can be a prohibitive factor.

    “This is why I would argue that technology has got an important role to play in lowering the cost of advice. People heading towards retirement are going to need someone to help them along. Now, if can be aided by technology then it will help keep the cost down. Certainly, that was part of the thinking emanating from the Quality of Advice Review.

    “But technology will never replace the human perspective. So, we’ll end up with a hybrid advice model where I have a conversation with my financial planner to set the strategy and then use technology to implement it. It’s what’s happening in the UK and it’s going to happen here.”

    Superannuation funds, too, have an important role to play, with Keary arguing it’s not just having a greater focus on retirement outcomes.

    “People are members of the funds for decades now, so it’s incumbent on these funds to play a bigger role in improving their members’ financial literacy. It also applies to financial advisers; indeed, everyone has a role to play in this regard. It’s simply too important to ignore.

    “From my perspective, the industry funds, in particular, are recognising this responsibility and are stepping up to the plate and accepting they have an important social role to play.”

    Keary adds that many in this phase of their lives also want to help their children now rather than wait until the final curtain falls.

    “At what point do people start transferring money to their children? That’s a decision that will not only dictate the type of retirement that they’re going to have, but how long they’re going to work for. So, I’m seeing a lot more conversations happening where people will willingly work for another five years to help their children get a deposit for a house.”

    He concludes that Australia is well placed to maximise people’s retirement, arguing that we have a world-class superannuation system that’s often not fully appreciated.

    “Many other countries envy what we have here. They see it as am model to emulate. What we must do is now adapt it so it can serve people in the decumulation phase as well as it’s served them in the accumulation phase. With the use of technology, there’s no reason this is not possible.”

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