Why superannuation isn't the key to a golden retirement

Retirement planning for most people centres on superannuation. But according to Dr Joanne Earl senior lecturer at UNSW School of Psychology, a healthy nest egg is just one of many requirements for a successful transition to retirement. Through surveying hundreds of over 50s, Earl and colleague Cindy Leung have identified the main elements involved in ensuring people are truly equipped to enter their third age.

Get healthy

Health tops the list of factors that ensure happiness in retirement, rivalled only by finances. "If your health has been compromised, your options are going to be more limited," Earl says.

"You should be thinking about factors related to exercise and diet well in advance."

Staying healthy also increases the likelihood of being able to control when and how you leave the workforce. "If you plan to work part-time before you leave the workforce completely, but your health hasn't been maintained, you'll most likely find your exit is abrupt," Earl explains.

Manage your expectations

Having enough money in retirement is less about a dollar sum and more about aligning your expectations with the funds you have, Earl says.

This comes from a study where people with vastly different levels of retirement wealth were asked if they believed they were comfortably well off. "Some living on less than $8000 a year were saying yes, while some on over $200,000 were saying it wasn't enough," Earl says.

"You're going to need a lot more money to holiday on the OE2 each year than you will if you're prepared to eat vegemite sandwiches in a caravan park. You need to be realistic about how you might need to change your expectations to meet your level of income."

Work it out

More than 40 per cent of people plan to work part-time before completely exiting the workforce, but few actually do, according to the researchers' surveys.

If this is your plan, Earl suggests working towards it ahead of time by finding out if flexible work options are available within your organisation." Ask yourself if your job is something you could do part-time," she says. "If that's not an option in your current job, think about what else you could do, and what additional skills or re-training might be required to achieve that goal. Treat your retirement as part of the career phase. Think about what strengths you've got and what skills you want to leverage for the future.”

Use your network

Retirees may envisage themselves living out their twilight years on the golf course or at the bowls club, but only about 20 per cent take up a new activity post- retirement, according to the surveys.

"You've got to initiate a whole lot of new social contacts and an additional level of confidence to launch into these activities," Earl says. Rather than expecting to stumble upon a group of like-minded retirees after clocking out of the workforce, she suggests starting new activities before retiring to expand your social network, and also leverage off existing contacts at work.

"One thing that insulates individuals against depression or anxiety is having people around them," she says.

Try new things

Even if you're not into brain training games or Sudoku, you can keep challenging yourself with new experiences and activities. "Join a book club to get you reading and discussing ideas with people," Earl suggests. "You're stimulated by trying new things and engaging in social activities."

By actively challenging yourself, you're less likely to second-guess your abilities.

"If I'm 25 and have forgotten my shopping list, I'll just think I'm disorganised, but if I'm 85 I might think it's the first sign of dementia," Earl says. "If you're really concerned, you should see your GP so you can put it to rest."

This helps avoid what she refers to as the" cascading effect" whereby people withdraw from social activities when they start feeling like they're slowing down.

Keep setting goals

Today's 65 year-olds can expect to live for an additional 20 years, on average, according to the Australian Bureau of Statistics. Since retirement lasts for such a long time, Earl says people should view it as a process, rather than an event.

"People think about getting that gold watch as a reward for their hard work, but retirement isn't just about that one day," she says.

"People who plan more, and reflect on what they still want to do and haven't done yet, tend to adjust better (to retirement). Some might want to do volunteering, others might want to go to uni to do further studies, travel or spend more time with their grandchildren."

An active approach to planning makes it easier as they occur. "You can never plan entirely - people will have accidents or ill health- but the more you plan, the more you'll feel like you're in control," Earl says.

This article was first published in the Telegraph.com.au Digital Print Edition on 9 March 2014.