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This week I’ve been standing in rooms with hundreds of Australians talking about retirement. And afterwards, I’ve lingered to chat with people about what they’re hearing and feeling, what surprises them and what they’re still trying to work out.
Yesterday, a woman came up to me and said “I’ve been thinking a lot about what you say about time – and how it becomes the most important currency once you’re in retirement. And I’m feeling that. It’s making me want to hurry up and get to retirement – and coax my husband to get there too.”
Another woman on the same day commented on one of my Facebook posts, “It’s terrifying, as a single woman, there’s no room for errors.”
Two women thinking about the same stage of life, but looking at it through very different lenses. One is worried about running out of time. The other is worried about running out of money. And I think these two fears tell us an enormous amount about the challenge of planning for retirement right now.
We’re in a cost of living crisis. Everything is more expensive, and for many Australians approaching retirement, the financial goalposts seem to keep moving away from them.
Just when they thought they might be getting close to having enough, the costs of groceries, insurance, electricity and travel – and just about everything else – have climbed. And economists are saying inflation might stay higher for longer.
But there’s another huge pressure building alongside this. People are getting older, and their partners are getting older alongside them. Their parents are getting older, their kids are growing up, and the things they have spent decades promising themselves they’ll do in retirement aren’t necessarily getting any easier to put off doing.
For many people, these aren’t two separate fears – they’re competing worries in the same household, sometimes even the same person.
They want to know they’ll have enough money to live comfortably for another 25–35 years, but they also hope to know they’ll have enough healthy years to enjoy the retirement they’ve worked so hard to be able to fund.
And I have to deliver a really uncomfortable truth here: there isn’t a retirement calculator in the world that will tell you exactly how long you’ll live, how healthy you’ll be or how much time you’ll have to do the things that matter most to you.
So, while the financial industry tends to frame retirement planning around the risk of running out of money, I think we need to get better at helping people consider the other big risk too: that you run out of time before you even make a dent in your money.
I’m calling it the “risk of waiting too long”. And the risk of waiting too long is tricky because unlike investment risk or inflation risk, we can’t put a number on it at all.
We don’t know whether we’ll be healthy enough to travel at 75, or whether our partner (if we have one) will still be well enough for us to travel together. We don’t know exactly when, or for how long we’ll need to care for ageing parents, and whether those years will come right when you’d hoped to take a long slow trip through Europe.
We don’t know whether our kids will want to spend their holidays with us in five or 10 years, or whether they’ll be busy building lives and families of their own. We don’t know when a health scare, a redundancy, or a change in family circumstances might turn the retirement we’re imagining into something quite different.
That’s the thing about time. Unlike money, we can’t save it up for later. We can’t invest it, earn interest on it, or get back the years we didn’t use. But we can make more deliberate choices about how we spend the time we have, while we have it.
So how do you make sensible financial decisions about retirement when you’re trying to protect yourself against two very different risks?
I think the first thing we need to do is stop treating retirement like it’s a single event in our lives that happens on a particular birthday, when we’ve finally accumulated enough money to feel safe.
For many people, there might be more choices available to them if they contemplate working longer overall, but working less along the way. And that could mean enjoying a little more freedom in their late 50s and early 60s while their health is good, rather than putting everything off until the day they finally stop working.
Maybe that means moving to four days a week, or taking longer holidays, or possibly even shifting into a less demanding role. You might end up working for a few more years overall, but enjoying a better balance of work and life sooner. And when time is becoming your most important currency, that is a trade-off worth exploring.
Both the women mentioned above are traversing their reality. One wants to hurry up and get to retirement, while the other is terrified of making a financial mistake. And I don’t think either of them is wrong. The challenge is to find a way to respect both fears, without allowing either of them to dictate every decision we make when we’re thinking about retirement.
A good retirement plan should not just be about making sure your money lasts as long as you do. It should also help you understand how you can make the most of the years when you’re healthy enough, free enough, and financially secure enough to enjoy it.
So, contemplate these two fears side by side this week, and ask yourself which one is driving your decisions more – the fear of running out of money or the fear of waiting too long to start living the life you’ve been saving for?
Bec Wilson is the bestselling author of How to Have an Epic Retirement, a retirement educator and founder of the Epic Retirement Institute. She writes a weekly newsletter about modern retirement at au.epicretirement.net . Bec has various commercial arrangements with a range of organisations, including superannuation funds.
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