Stopping work is a big shift – especially when you haven’t planned for it.
Why you might face a sudden retirement
Only one-third of Australians retire because they’ve reached retirement age. For many, retirement happens earlier than they expect due to events outside their control. These can include:
- Job loss or redundancy: some people are forced to retire when they lose their job and can’t find another, or if their business closes
- Caring responsibilities: people may stop working to look after a partner, parent, or child
- Health changes: an unexpected illness or injury can make it hard to keep working
- Problems at work: work can become unmanageable due to a lack of flexibility or feeling excluded or undervalued.
- A partner’s decision to retire: one partner retiring can prompt the other to stop working too.
Whatever the reason, unexpected retirement can throw your plans off course and leave you dealing with loss of income, purpose, and routine.
Managing the change means tackling short term pressures first – and then thinking ahead to what comes next.
Key steps to help manage unexpected retirement
Here are five things you can do to help regain control if you face sudden retirement.
1. Review your finances
If you’ve stopped working unexpectedly, you may not have had the time to assess your finances.
But knowing what you have and what you spend can help you take control and avoid bigger problems later.
Income and assets might include:
- Termination payments: when you leave a job, you’re entitled to be paid out any unused annual leave, long service leave and other entitlements. If your employer ended your job, you might be entitled to redundancy pay or pay in lieu of notice.
- Superannuation: leaving a job after turning 60 means you can access your super. If you’re under 60, there are rules about early access to super.
- Savings: if you have money or investments outside super, these can support you when you’re no longer working.
- Property: this includes the home you own and live in, which you could downsize or borrow against, as well as any investment property you have.
- Government payments: depending on your age and circumstances, you may be eligible for government support. Services Australia provides support for people who have lost their jobs.
- Insurance: if you stopped work due to illness or injury, you may be able to claim on any income protection or total and permanent disability (TPD) insurance you hold.
- Partner and family support: if you live with someone or have family who can help, their support may form part of your financial options.
- Part-time work: if you have, or can take on, a part-time role, this can ease financial pressure.
Once you know what’s coming in, you can look at what you’re spending. Start with the regular expenses that you can’t easily avoid. These might include:
- Housing: rent or mortgage payments, rates, insurance
- Utilities: electricity, gas, water, phone, internet
- Food and household goods: groceries, personal care
- Health: healthcare and medical appointments
- Transport: car registration, insurance and running costs, plus public transport
2. Manage any debts
Stopping work can make it harder to keep up repayments on home loans and credit cards.
When it comes to debt, the sooner you act, the more options you have.
First, make a list of who and what you owe, and when it’s due. Then, plan payments in order of priority.
3. Check what support is available
Depending on your circumstances and your age, you may be eligible for government support – even if you’ve never applied before.
Read losing your job for information on what help is available and the steps you can take to find support. And visit Services Australia for more information. If you find the online information confusing to understand, Services Australia have Financial Information Services officers to help you.
Recognise that you might need support to take care of your mental health as well – and that it’s okay to ask for help. Talk to friends and family about how you’re feeling.
Lillian’s health scare
Lillian, 61, was working four days per week as an office manager at a local real estate agent’s office. She always enjoyed her job, loved a yarn with the team, and had hoped to keep working well into her sixties.
But things took an unexpected turn when Lillian experienced a serious health scare just over a year ago. Previously, she’d been fit and active, rarely needing more than the odd visit to the doctor, but the sudden onset of health issues meant she now had to focus on her wellbeing and attend regular medical appointments.
Learn what action Lillian took.
4. Start planning for what’s next
Once you’ve organised your immediate situation, start thinking about what you want the next stage to look like.
That means making some decisions about how you want to live, and how your money will support that.
You might be living on less than you expected or using your super earlier than planned.
Planning now can help you make confident choices about:
- How and when to draw down from super
- Adjusting your spending to match your income
- How your super is invested
- Whether your housing arrangements are still suitable.
Speaking to us to make a retirement plan can help you work through these decisions.
5. Get help before making big changes
Some decisions are too important to rush.
Before you sell your home, start drawing from super or make major investment changes, get advice.
We can help you understand your options.
Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/plan-for-your-retirement/managing-unexpected-retirement
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