Retirement happiness can stem from this one big decision

Many seniors need a solid income to enjoy retirement, but another key ingredient is required too, a university study has found.

Happy retirees have more than just lots of money. Picture: iStock

Researchers have uncovered a secret ingredient for wellbeing in retirement, and it’s not all about money.

A new study by Macquarie University and financial services group Challenger has found that seniors who are able to choose the timing of their retirement have much less stress after leaving work.

Ten per cent of Australia’s population is set to retire in the next decade, and financial security also plays a key role in giving seniors freedom and empowerment, the study of 1000 people aged over 60 found.

Macquarie University professor of psychology Joanne Earl said people who chose when they retired “adjust best and worry less”.

“It’s all about stepping into retirement on your own terms,” Prof Earl said.

“Proactively choosing how and when to retire may be the secret ingredients to wellbeing in our golden years,” she said.

Good health is important for seniors’ wellbeing, along with social connections. Picture: iStock

However, for many seniors the choice is taken from them.

Separate research earlier this year by Aware Super found two out of five Australians were being forced into retirement years earlier than planned, as factors such as health issues, redundancy and burnout pushed them out of the workforce.

And data from the Australian Bureau of Statistics shows that in 2022-23, 13 per cent of retirees left work because of sickness, injury or disability, while 5 per cent lost their jobs. Almost one-third of retirees leave work simply because they reach pension age or become eligible to access their superannuation.

The Macquarie and Challenger research also found having a clear purpose is vital for a positive retirement, and that seniors receiving a guaranteed income reported higher levels of mental health and better social connections.

“Purposeful activities and good health are crucial for maintaining a high quality of life,” Prof Earl said.

Challenger says choosing when to retire is the “secret sauce to retirement bliss” and its chief executive, customer, Mandy Mannix, said retirees receiving guaranteed incomes outperformed on all happiness metrics.

“There are some things in life you can’t put a price on – having a reliable income every month is one of them,” she said.

“Think of it this way: if you knew that your essentials like energy, groceries, and rent were covered every month, come what may – wouldn’t that add a spring to your step?”

Ms Mannix said demand for guaranteed income products such as annuities was growing, but still represented a relatively small proportion of the population.

“After working so hard throughout their lives, retirees deserve the freedom to truly enjoy their well-earned leisure, and financial security can help with this sense of freedom.”

Catapult Wealth director Tony Catt said being able to choose a retirement date was powerful and delivered seniors flexibility.

“What we aim for is peace of mind – where you don’t have to work but you choose to work,” he said.

Challenger’s Mandy Mannix. Picture: Supplied

“Having that choice empowers people. They might change careers, do charity work or mow lawns, and they know even if they don’t work, they’re going to be fine.”

Mr Catt said retirees still needed a purpose: “working has a benefit to mental health too – waking up every day and having a purpose”.

He said guaranteed income products had struggled to attract many retirees because Australia was blessed with other strong sources of income such as share dividends and property rents, even though they were not guaranteed.

Age pension payments are government-guaranteed income “but that’s a break-glass-in-case-of-emergency fallback,” Mr Catt said.

“With the cost of living now, it’s not a good thing to aim only for that,” he said.

Originally published as Retirement happiness can stem from this one big decision