Whilst the idea of retirement might be relatively young, its definition seems to have evolved in the last few decades from a linear approach to a more segmented type of retirement.
One of the major contributing factors in the last decade is our life cycle. Towards the end of the 20th century, the average life expectancy in Australia was about 51 years old. Today, the average life expectancy for Australians is about 83 years old. The result is that we now think differently about age, and also what is considered ‘old age’. Greater improvements in health care and lifestyle lead us to living a healthier and longer life, but how does this impact the traditional life cycle of study, work, then retire?
In our experience with clients, we are increasingly seeing more retirees who transition much slower from full-time work to no work, or even continuing part-time work on an ongoing basis. What is definite is that there is no one way to retire; retirement means different things for different people.
Here are some of the most common types of retirement in our modern day.
Semi-Retirement
A semi-retirement could also be considered a working retirement, where you haven’t fully stopped work but still consider it a priority to have time off and enjoy life. You may wish to continue your previous career in a reduced capacity or you may like to change to something less stressful and demanding on a part-time basis. Either way, a semi-retirement can be an easier transition than stopping work completely.
This option is also great for those who actually enjoy working. It may offer good mental stimulation and a way to stay active. It can also be helpful for those who identify themselves with their work, and so it can be difficult to give up entirely.
Mini-Retirement
The traditional model of retirement means you work and wait maybe 20 or 30 years before you can take that long holiday or spend more time with grandkids. With a mini-retirement, the idea is you break up your working years into smaller chunks with ‘sabbaticals’ in-between. You might work 5 or 6 years and then have one or two years off and repeat the process again.
The great thing about a mini-retirement is that you get to do the things you want at any age. The not so great thing is that you won’t have as much in savings when you do eventually slow down your working life.
However, a mini-retirement can be attractive to people who are looking for a career path that is outside the box.
Early Retirement
An early retirement is perhaps a dream for some but when it comes to the nuts and bolts of what an early retirement is, it’s about having enough money to age 100 without working for money again. Early retirement isn’t an option for everyone and tends to be more aligned with entrepreneurs and business owners, though on rare occasions those who save ‘early and often’ have this option.
It’s not uncommon to hear people who have retired early and then find themselves returning to work later on. Having a huge chunk of time can actually be challenging if you have already fulfilled things you would like to do in life.
There is no right way to retire. It’s a matter of finding what works best for you, your lifestyle and values.
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Disclaimer: This post has been prepared for general information purposes only. It is not specific advice to any particular person. You should consult an authorised Align Financial adviser before making financial decisions. Align Financial | Financial Planner Northern Beaches | Servicing North Narrabeen, Narrabeen, Mona Vale, Elanora Heights, Newport, Avalon, Palm Beach | Enquire with us online.
