Whilst the average age at which Australians plan to reduce their work commitments and transition into retirement is 62.5 years, and the average age of being fully retired being 64.8 years, the actual reality is much different.

This was one of the key findings in a new report by Fidelity International – New life, old life – which found that the average age at which Australians actually started reducing their work commitments was 61.4 years, and the average age they fully retired was 63.4 years.

According to the Head of Client Solutions and Retirement at Fidelity International, Richard Dinham, despite the intentions of most older Australians to work longer than previous generations, the report discovered that due to a range of factors – including personal health issues (two-in-five), caregiving (one-in-eight), and redundancy and job loss (one-in-eight) – the average Australian was retiring earlier than planned.

“Despite the good intentions of people to work longer – due to greater workplace flexibility and greater employment opportunities – most older Australians are not actively planning for the final chapters of their working life,” says Richard. “The findings of the report reveal that the runway to retirement is shorter than expected, with most of us not working for as long as we intend to.

“Sometimes the reasons are out of our control and sometimes, they’re not. The outcome is that many Australians are retiring before they planned to, or before they expected to, which can cause both emotional and financial stress.”

Richard adds that this gap between planning and reality is making people feel out of control when it comes to retirement planning.

“A key driver of a positive emotional experience at retirement is a sense of control in the decision, however, one-in-four retirees report feeling out of control at retirement,” he says.

“Those who didn’t perceive they had a choice in when they stopped full-time work had a terrible time. Seven-in-10 felt completely out of control and experienced negative emotions when they stopped full-time work. Whereas those who felt completely in control when they stopped working full-time had an overwhelmingly positive emotional experience (nine-in-10).

However, the good news is that despite the reason for retiring early, pre-retirees are the most open demographic to receiving financial advice.

The report found that four-in-five pre-retirees currently receive advice, have received advice in the past, or would consider receiving financial advice. And of the pre-retirees who have never received financial advice, three-in-five are open to it. Importantly, the report confirmed that financial planners are the preferred source of professional advice by pre-retirees (55 per cent), compared to accountants (23 per cent), and employers (9 per cent).

In terms of their future retirement, the report also noted that the majority of pre-retirees (90 per cent) have significant questions they want answered about the affordability of their retirement. The five most common questions are:

• How much do I really need?
• Am I on track?
• What are my options?
• How much should I be saving today?
• What can I afford to spend in retirement?

According to Richard, the financial planner who uses modelling tools at the initial interview and shows how these questions will be addressed if the client engages their services, will inevitably fast-track the client understanding of the value of advice and be more willing to pay professional fees.

“Most Australians invest a lot of energy into building their careers, but not necessarily the inevitable wind-down phase of their working life. Evidence shows that actively planning for this phase of our lives, including seeking the advice of a financial planning professional, makes the transition more successful,” says Richard.

FPA CEO, Sarah Abood echoes Richard’s views, referring to research recently undertaken by the FPA to measure the benefits and value of working with a financial planner. She says the findings couldn’t have been clearer.

“Australians with an active relationship with a financial planner are better off. They suffer less financial stress, enjoy a higher quality of life, have more financial confidence, and are more satisfied with their wealth,” says Sarah. “When it comes to retirement, advised pre-retirees envisage a brighter retirement future than the unadvised, and advised retirees experience a better retirement.”

The report – New life, old life – was based on the survey responses of 1,207 Australians aged over 45, with fieldwork undertaken in August 2022 for Fidelity International by independent research firm, MYMAVINS. The report explored when participants planned to retire, what they thought retirement looks like, and how they were preparing for this phase of their lives.