Financial planning for retirement is vital, but don’t discount the emotional and psychological impacts
To help you thrive in retirement, prepare for your emotional responses, create structure, set goals, and maintain social connections.
Five changes to expect when you retire
1. How you get paid
Most working Australians earn income from a job in the form of a wage or salary.1 But once you retire from the workforce, you will need to rely on other sources of income. Australia’s retirement income system is based on three pillars – super, the government Age Pension and private savings. Many retirees rely on a combination of all three.
Understanding how to access each of these income sources, and how they work together, can help you get a clearer picture of where your money will come from during retirement.
The amount of money coming in may also change considerably from what you’re used to. Preparing a retirement budget can help you get a realistic view of your likely expenses.
Retirement income calculator
Find out how much income you’re on track to receive when you retire.
2. How your days are structured
One thing retirement can provide is time; time to do whatever you want. But it often lacks structure. While you’re working, your days are mapped out to a degree – with start and finish times, meetings, appointments, and meal or rest breaks.
Routines have been shown to support mental health,2 and the loss of work-related routines can be stressful, particularly in the early stages of retirement. Adding some structure to your days may help you feel more in control of your time.
3. How you meet and mix with other people
Work often provides a built-in social network of colleagues and co-workers, and leaving the workforce can reduce your day-to-day contact with others. Significant life changes, such as retirement, come with an increased risk of social isolation and loneliness.3
Strong social connections are an important part of staying mentally and emotionally healthy, so your retirement lifestyle planning should include opportunities to connect and nurture relationships with family, friends, and the wider community.
Additional resources
Retirement lifestyle checklist
Our retirement lifestyle checklist can help you identify your needs and priorities.
4. What gets you up in the morning
Finding purpose in life often comes from pursuing something meaningful; for many, that’s their work.4 McKinsey research, conducted during the COVID-19 pandemic, shows people with a strong sense of purpose tend to be more resilient and exhibit better recovery from stressful events. During times of great change, individual purpose can be a guidepost that helps you navigate uncertainty and manage stress.5 So take a moment to reflect on what truly motivates you and gets you up in the morning.
5. Changes throughout retirement
Retirement is not a one-off event but a new beginning. And it can last a long time – an average of 20 years or more according to the latest statistics6 and you can expect things to change over those years. For one, you’re going to get older and planning well in advance can significantly reduce the emotional and financial stress of ageing care needs.
As a Mercer Super member, you have access to ageing care support and advice for yourself or a loved one at no additional cost through Care & Living with Mercer.
A good retirement plan should consider more than just how much money you need. Anticipating and planning for the emotional aspects of retirement can help you avoid pitfalls like loneliness and boredom that sometimes set in after the initial excitement wears off.
The right advice can help you make the right choice
No matter where you’re at in life, the right advice at the right time can help you take charge of your super and retire with confidence. With Mercer Super, accessible advice is always within easy reach.
Explore more: it’s your time to prepare
1. Personal Income in Australia, 2020-21 financial year | Australian Bureau of Statistics (abs.gov.au)
2. Routines and mental health - Beyond Blue
3. Frontiers | Social Support, Isolation, Loneliness, and Health Among Older Adults (frontiersin.org)
4. Help your employees find purpose—or watch them leave | McKinsey
5. Igniting individual purpose | McKinsey
6. Life expectancy - Australian Institute of Health and Welfare (aihw.gov.au)
Disclaimer: This content has been prepared on behalf of Mercer Superannuation (Australia) Limited ABN 79 004 717 533, Australian Financial Services Licence #235906, the trustee of the Mercer Super Trust (‘Mercer Super’) ABN 19 905 422 981. Any advice is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on any advice, please consider the Product Disclosure Statement (including incorporated documents) and Financial Services Guide available at mercersuper.com.au. The product Target Market Determination can be found at mercersuper.com.au/tmd. The material contained in this document is based on information received in good faith from sources within the market and on our understanding of legislation which we believe to be accurate.
Care & Living with Mercer is a service provided by Mercer Consulting (Australia) Pty Ltd ABN 55 153 168 140. Please read Care & Living with Mercer website Terms of Use when accessing the service.
* Any information in this material regarding legal, accounting or tax outcomes does not constitute legal advice or an accounting or tax opinion and prior to relying and acting on this information it is important that you seek independent advice from a qualified lawyer or accountant regarding this information. Past performance is not a reliable indicator of future performance. 'MERCER' is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917.
Past performance is not a reliable indicator of future performance. 'MERCER' is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917.