Managing unexpected retirement

Stopping work is a big shift – especially when you haven’t had time to plan for it.

Unexpected retirement can throw your plans off course and leave you dealing with loss of income, purpose, and routine.

Managing the change means tackling short term pressures first – and then thinking ahead to what comes next.

Why you might face a sudden retirement

Only one-third of Australians retire because they’ve reached retirement age. For many, retirement happens earlier than they expect due to events outside their control. These can include:

• Job loss or redundancy: some people are forced to retire when they lose their job and can’t find another, or if their business closes
• Caring responsibilities: people may stop working to look after a partner, parent, or child
• Health changes: an unexpected illness or injury can make it hard to keep working
• Problems at work: work can become unmanageable due to a lack of flexibility or feeling excluded or undervalued.
• A partner's decision to retire: one partner retiring can prompt the other to stop working too.

Whatever the reason, an unexpected retirement can disrupt your plans and finances.

Five key steps to help manage unexpected retirement

Here are five things you can do to help regain control if you face sudden retirement.

1. Review your finances

If you’ve stopped working unexpectedly, you may not have had the time to assess your finances.

But knowing what you have and what you spend can help you take control and avoid bigger problems later.

Income and assets might include:

• Termination payments: when you leave a job, you’re entitled to be paid out any unused annual leave, long service leave and other entitlements. If your employer ended your job, you might be entitled to redundancy pay or pay in lieu of notice.
• Superannuation: leaving a job after turning 60 means you can access your super. If you’re under 60, there are rules about early access to super.
• Savings: if you have money or investments outside super, these can support you when you're no longer working.
• Property: this includes the home you own and live in, which you could downsize or borrow against, as well as any investment property you have.
• Government payments: depending on your age and circumstances, you may be eligible for government support. Services Australia provides supportfor people who have lost their jobs.
• Insurance: if you stopped work due to illness or injury, you may be able to claim on any income protection or total and permanent disability (TPD) insurance you hold. Contact your insurer or super fund to check what cover you have and how to make a claim.
• Partner and family support: if you live with someone or have family who can help, their support may form part of your financial options.
• Part-time work: if you have, or can take on, a part time role, this can ease financial pressure.

Once you know what’s coming in, you can look at what you’re spending. Start with the regular expenses that you can’t easily avoid. These might include:

• Housing: rent or mortgage payments, rates, insurance
• Utilities: electricity, gas, water, phone, internet
• Food and household goods: groceries, personal care
• Health: healthcare and medical appointments
• Transport: car registration, insurance and running costs, plus public transport

For more guidance and information, see work out how much you need to retire.

2. Manage any debts

Stopping work can make it harder to keep up repayments on home loans and credit cards.

When it comes to debt, the sooner you act, the more options you have.

First, make a list of who and what you owe, and when it's due. Then, plan payments in order of priority.

See get debt under control for more.

If you need help, call the National Debt Helpline on 1800 007 007. 

3. Check what support is available

Depending on your circumstances and your age, you may be eligible for government support – even if you’ve never applied before.

Read losing your job for information on what help is available and the steps you can take to find support. And visit Services Australia for more information. If you find the online information confusing to understand, Services Australia have Financial Information Services officers to help you.

Recognise that you might need support to take care of your mental health as well – and that it’s okay to ask for help. Talk to friends and family about how you're feeling.

Beyond Blue has useful information about looking after your mental health.

You can call Beyond Blue on 1300 224 636 to talk to someone (24 hours a day, 7 days a week). Or use their web chat service (3pm to 12am).

4. Start planning for what's next

Once you’ve organised your immediate situation, start thinking about what you want the next stage to look like.

That means making some decisions about how you want to live, and how your money will support that.

You might be living on less than you expected or using your super earlier than planned.

Planning now can help you make confident choices about:

• How and when to draw down from super
• Adjusting your spending to match your income
• How your super is invested
• Whether your housing arrangements are still suitable.

Making a retirement plan can help you work through these decisions.

5. Get help before making big changes

Some decisions are too important to rush.

Before you sell your home, start drawing from super or make major investment changes, get advice.

Your super fund, a financial counsellor or a licensed financial adviser can help you understand your options.