Retirement Life
3 July 2024

I have never liked retirement

I have never much liked the word “retirement”. It has connotations of withdrawal, retreat and ceasing to operate in the real world. It may have been fine for my parents’ generation when retirement was a “thing.” Thirty years ago, people retired on a nominated day and that was it - what I call the work.stop.retire lifecycle. On the nominated day you went to work as usual, then the next day you didn’t. That was retirement.

What does retirement mean now?

It’s harder to define what we mean by retirement today – everyone has their own version of it and work.stop.retire. is not as common. Although there are still retirement parties with drinks and nice speeches, the centre of the party (the retiree) is often back in the office a few days later carrying on in some capacity or other.


In 2023, 48% of Kiwis aged 65 – 69 still had a job (up from 15% in 1987). And that just refers to paid work – there are plenty of +65s rushing around helping family, volunteering, minding the grandchildren…in short, not behaving as if they’ve “retired”.  The thing I hear from older people is that they wonder how they ever fitted in a day-job.

There is no doubt that this current generation of retirees sees “retirement” quite differently from previous ones – the change has been huge.


Many reasons to keep working

Sometimes people work beyond age 65 because they want to; others because they have to. And then there are those who are uncertain whether they have enough money and, just to be sure, they carry on for a bit.


Calculate what you could draw in retirement.

The demise of defined benefits

I think more people working past retirement age is partly driven by the demise of Defined Benefit super schemes. Those wonderful work pensions used to pay a percentage of your finishing salary for life and, as such, gave certainty in retirement. You weren’t dependent on financial markets and knew exactly what you were getting, which was plenty to live on.


Companies and the New Zealand government stopped offering defined benefit schemes about 40 years ago. While there are still people enjoying such payments (mostly public servants like teachers, doctors, police, and some nurses etc.) they were simply too expensive to continue with.


Left to our own devices

We are now all left to our own very uncertain devices, which usually means taking the lump sums we’ve saved and investing them. We have to deal with the uncertainty of things like investment returns, our life expectancy, and inflation which, combined, make us worry whether we’ll have enough. This anxiety keeps people working - just in case.


The benefits of working for longer

For those who are anxious about whether they have enough, working for a few more years isn’t a bad idea. Provided it’s not too arduous or boring, working for longer does stretch out the savings and makes it more likely that your money will last as long as you do. This is for three main reasons:

  1. Provided you do not touch them, your savings will continue to grow in those years that you work.

  2. You may be able to contribute more to your savings.

  3. You will have fewer years to make the money last. If your life expectancy is 90, at age 65 you have to make the money last 25 years; if you work through to age 70, the money needs to last 20 years.

Put these things together and you get a better drawdown rate (you can take more from your investments), and you have more certainty.


Not all work is equal

However, not all work is equal. Some jobs are suitable for an older person, while others are not. Meanwhile, not all older people will easily find work (ageism is alive and well).


While some older people would like to continue whatever it is they’ve spent their lifetime doing, there are many people who want to do something completely different. I know many examples of this: ex-lawyers picking grapes in the season, ex-teachers driving coaches, ex-nurses guiding tours, etc.


You do need to plan the work you’re going to do and plan it early. You may not be able to just walk in off the street and come out driving a taxi, for instance!


Project your retirement income.

The last third of our lives should be the best. And I don’t think a bit of work needs to get in the way of this. In fact, with the social interaction, the routine, and the cash that work provides, it should enhance it. Work really does work.


Photo of Martin Hawes
Written by:

Martin Hawes

Martin Hawes is not a Financial Adviser or a Financial Advice Provider, and the views in this article are not intended to be financial advice. The views and opinions are general in nature, and may not be relevant to an individual’s circumstances. Before making any investment, insurance or other financial decisions, you should consult a professional financial adviser. Martin Hawes is a director and shareholder in Lifetime Income.

Invest with Lifetime for a retirement income managed for living.

Enjoy more retirement news with Lifetime