Retirement planning: how to prepare beyond the numbers

While talk of retirement readiness often focuses on finances, there’s also a psychological shift to consider. For many, work is tied to identity and self-worth, and the end of our career can leave even the best of us feeling lost. 

So, what’s the best way to prepare for the change of retirement?

Right now in Australia, there are over 4 million retirees, with about 130,000 more retiring each year. While there is no official retirement age, you must be 67 to be eligible for the Age Pension.

For some, it is a stage of life that can’t arrive quickly enough; one they have been planning for years. For others, it is difficult to let go of the routine and structure that work provides, making the transition more difficult.

A fulfilling retirement is about more than having enough money to pay the bills – it is about purpose, good health and staying connected to the community and those we love.

Bec Wilson, author of How to have an Epic Retirement, believes finding a sense of purpose after leaving the workforce is crucial for long-term happiness. However, it is often something many people don’t consider until they’ve already finished work.

“According to the dictionary, retirement is defined as growing old and stepping back. I have a new definition: retirement should be about stepping into financial independence and choosing how you spend your time,” she explains. 

By 2030, all baby boomers will be aged 65 or older. Considering current life expectancy extends into the mid-80s, this redefined approach to retirement makes perfect sense for those looking at 15+ years of post-working life.

For younger generations, life expectancy is likely to hit the mid 90s, so making plans now for how to spend the decades post-career is a smart move.

“Many people find that their work gives them structure, identity and meaning. Without it, there’s an opportunity – and sometimes a challenge – to redefine what makes life fulfilling and discover your purpose,” says Wilson.

The best way to do this is to use a framework that brings together skills, passions and values, she says.

“Retirement should be a period of extraordinary choices,” Wilson says. “It is not a phase of life where the rules are clear. You have to keep making active choices to do the things you want to do, rather than going somewhere each day because you are paid to.”

Wilson advises people to start looking at what they want their life to look like in retirement, now. Think about skills to learn, passions to pursue and values that will provide guidance on what matters most. It will look different for everyone. 

“Eventually, you’ll discover some green shoots on the other side that become your purpose for the next phase of life,” she says.

Take small steps to retirement

While there are many ways to go about it, transitioning from full-time to part-time work is a good path for some people to ease into retirement. 

“An increasing number of people are opting for what’s known as ‘bridge employment’: staying in the same organisation but taking on different roles, such as casual consulting, to stay socially engaged and preserve their sense of identity,” says Dr Amanda Ferguson, author and psychologist. 

Employers can play a crucial role in supporting the transition to part-time or flexible work. By offering options like job sharing, consulting or project-based work, they can retain valuable knowledge and experience within the organisation, says Ferguson. 

“This shift offers a way to maintain meaningful involvement without the pressures of full-time work. Others stay connected through mentoring and coaching opportunities,” she says.

“Retirement should be seen as a shift towards living a life that aligns with your values and passions. Most of us need to be productive to feel a sense of agency, and if that’s been important to you in your professional life, it will be just as important when you retire,” Ferguson says.

However, for those who haven’t enjoyed work and can’t wait to step back, Ferguson offers the same piece of advice: “don’t just retire, retire to something”.

Retirement ‘pacing’

Thinking about retirement “as a continuum” is one way to prepare for change, Wilson says. It allows for gradual adjustment, rather than just making a sharp break from work. 

Viewing retirement as an ongoing process allows control over the pace, making it easier to move into this next phase of life. This approach allows time to test new routines, discover what feels fulfilling and stay connected to a sense of purpose without feeling like you’re jumping off a cliff.

“You might start by scaling back your hours, then gradually fill that time with activities you enjoy – whether it’s exercise, looking after grandkids or pursuing personal hobbies,” says Wilson.

“Then, you might take a bigger leap. Perhaps you decide to take a 12-week sabbatical to see what life outside the workforce feels like. You can test this change, then return to work if it suits you,” she says.

“It’s all about pacing the transition to retirement in a way that works for you.”