Are you ready for retirement?

By Amy Cooper

The content is produced by the Good Weekend in commercial partnership with MLC.

When 69-year-old Pinky McKay tops up her savings, she’s doing it for someone she loves: Peggy. Peggy is McKay’s name for her future, 80-year-old self.

And Peggy should benefit well from her younger self, who is continuing a career that’s thriving far beyond the average age of retirement.

Almost a decade ago, when she could have been taking the final steps towards retirement, McKay felt nowhere near ready to stop working. Instead, she started a new food business at the age of 60.

“I’m still loving my work,” says the Melbourne-based lactation consultant, baby care author and businesswoman.

“You’re not on the scrapheap after 50, or after 60. You’ve got so much experience and as long as you still have the energy and appetite for it as I do, why not?”

McKay is among a growing number of Australians who don’t feel ready to retire when they’re eligible to – according to Federal Government data, we are increasingly working to older ages. In 2018, Australians aged 65 and over had a workforce participation rate of 13 per cent, compared with eight per cent in 2006.

Jenneke Mills, Manager, MLC Technical Services, says that as a result, many people are finding their own path to retirement.

Some, like McKay, continue to work full steam ahead, while others choose more flexible ways to work and transition into retirement – from freelancing and consulting to mentoring roles that harness their knowledge and experience.

“We know that working has benefits beyond a pay cheque. A job you enjoy engages your mind, offers social interaction, and creates a sense of purpose and accomplishment,” Mills explains.

Supporting this, MLC’s Retirement Journey Survey found that 31 per cent of respondents were concerned about losing their self-worth in retirement when they are no longer working.

Future financial security, however, also proves to be a strong motivation to work on for some, with data from Council on the Ageing (COTA) showing that 45 per cent of us do not feel financially secure enough to stop working at retirement age.

Moving forward

Despite the positive momentum of her career, McKay admits she hadn’t focused on providing for her retirement until it was knocking at the door.

It was only 12 years ago that McKay’s daughter persuaded her to start contributing to a super fund. That, combined with the success of her new business (a range of foods for breastfeeding mums), enabled her to finally get serious about a retirement plan.

“During my early career I was busy raising five kids and working part-time. So, although I was a saver and had a strong head for business, I am now playing catch-up on my retirement savings,” she says.

It’s a sentiment felt by over a quarter of pre-retirees surveyed by MLC, who admit they wished they had saved more, contributed more to super, and increased their overall retirement savings.

“The great news is that these ‘regrets’ can be very easily managed and avoided,” says Mills.

Todd Conklin, Principal Financial Adviser for MLC Wollongong, agrees. And he says it’s never too late to take charge of your retirement plan.

One of the keys to success, he explains, is building a clear picture of what you want from your retirement – just like McKay with her future “Peggy”.

“‘When would you like to retire?’ might sound like an obvious question, but it can depend on your desired lifestyle in retirement,” says Conklin.

“If having a certain standard of living in retirement is more important than when you quit work, you might need to work a bit longer to be able to achieve that lifestyle.”

For many, retirement planning is an emotive subject. “Pre-retirement can be a really anxious, emotional period. It can feel like standing on a precipice of this new life,” says Conklin.

“The biggest mistake people make is to get paralysed by that fear. It sounds so clichéd, but the biggest remedy is: just do it.”

He recommends starting with some simple information gathering. “Chat to people, ask what others have done in that situation, collect data, do research. Taking action is really empowering.”

Another question many find challenging is: how much do you need to retire? “The amount that you spend every year is an important factor,” says Conklin. “$30,000 a year is very different to $130,000.”

To help avoid the overwhelm that can come with budget calculations, Conklin recommends a simple formula to calculate your annual living expenses: take your bank balance 12 months ago, add all the money that’s come into that account since then, and subtract your current balance.

With a clear plan and the right help, Conklin believes everyone can come to feel as positive about their retirement as McKay.

While she jokes about her future Peggy “expecting a good lifestyle, with concerts and visiting the hairdresser,” McKay says her continuing career is a positive example of empowerment.

“There used to be a time when you reached a certain age and it all had to finish, but that’s no longer the case. We have so many choices now. I hope mine show that as long as you’re in good health you can make this life stage whatever you want it to be.”