During your working life, you’ll need to understand or know, every now and again, if you're still on track to reaching your goal. Our OnTrack analysis tool has six levers, which it uses as input to analyse your retirement outcomes. These levers, as we call them, allow us to correctly analyse how making a decision on one component or lever impacts the decisions or the outcome on a different component or lever.
Retirement age is a changing concept
If we're talking about normal retirement age, traditionally, we're all very quick to think 65. It’s our industry standard after all, but also, it’s the age that is our contractually noted age in our employment contracts, as well as our fund rules.
However, in our modern world, the concept of retirement age is slowly fading. Because we have reached an understanding that even though I'm contractually told to stop working, it doesn’t mean I'm unable to supplement my income or continue contributing to my household by producing an alternative income.
Although not all members have a choice in their retirement age, it's important to remember that there are other things that you can explore to try and supplement your income. For example, a member who is required by the employer to retire at age 60 instead of 65. Instead of fixating on that number, or the five years that you're not being given, it's time to explore other options.
For example, the other five levers in this tool: contribution rate, investment return, as well as maybe even making additional voluntary contribution. One of the most and yet very challenging ones are preservation. Normal retirement age is no longer a time factor. It's a choice of “am I ready financially to stop producing an income for myself?”
So, you may be contractually required to stop working, but financially, you may be required to continue. Do you then start thinking about increasing your contributions? Do you then start thinking about varying your investment strategy?
These are the conversations that will develop as you explore the six levers that we talk about. It will also allow you to think about normal retirement age as a more contractual arrangement, but not really a contract to stop saving, just your formal employment.
Now that you have more insight into retirement age, watch the rest of the videos in this series to learn about: