Convert fear of running out of money into a happier retirement
There have been several pieces of recent research that highlight the fear retirees have about outliving their money. The fear is so potent that it can drive excessively frugal living. Increased longevity only throws fuel on the fire. According to February 2018 research by National Seniors, 85% of people over 50 are aware that people are living significantly longer than their parents’ generation.
Having an income that covers expenses is the highest priority.
It can be helpful for clients, as they move into the retirement phase, to consider activities that generate extra income. Income that is in addition to the usual sources; retirement income products and the age pension.
Benefits of earning an income in retirement
Earning extra income has the benefit of deferring or reducing the drawdown of superannuation savings and reducing dependence on the age pension. With 330,000 age pensioners having their pension reduced last year due to threshold changes, sourcing income from several places has to be a good approach.
There are also non-financial benefits. Most Australians retire living active lifestyles and in good health and find the transition from ‘work’ to ‘retirement’ a challenging life change. Planning for purposeful activity that generates income can assist with the loss of social connection and sense of identity associated with paid work. Income generating activity expands life’s possibilities and opportunities, increasing happiness and contentment.
On-demand technology and the future of work
Shaping the future of work is new on-demand technology that makes it easier to pick up jobs, when and where we want to. Another is the monetization of activities and assets that we previously would not have thought of as ‘work’.
This is good news for retirees.
Sharing economy platforms are increasingly targeting older Australians. Qualities that mature people often have in spades; such as trustworthiness, courtesy and reliability, create measurable social capital.
Whilst Uber and Airbnb are better known for courting older people, (with 35% of Airbnb hosts in Sydney aged over 50), other platforms also have this demographic in their sights.
Consumer appetite has driven the penetration of sharing economy platforms into a broad range of markets; including food and hospitality, training, art and design, technology, real estate, transport, entertainment, domestic, health, professional and employment services. Over 100 platforms are operating in Australia.
Popular platforms chosen by older Australians tend to be those that enable them to use their expertise in a flexible way as well as those that turn a passion or hobby into an income stream. The benefit of the on-demand sharing economy is that your clients can turn the work on and off, when they want to, to accommodate activities such as travel and caring for family.
When is the best time?
For clients interested in setting up purposeful activities that generate income, a good time for them to consider options is before retirement or in early retirement. A specialist consultant can explore with your client their interests, capabilities and time available, and then put forward recommendations for consideration. For some clients, it’s a portfolio of income-earning options that works best for them. The specialist puts together a plan and checks-in with the client as it is implemented. It’s about setting clients up for success with strategies and tips so that they can earn a purposeful income that helps achieve the objectives of their overall financial plan.