For many Australians approaching retirement, the idea of stopping work completely is becoming less appealing. Instead, the trend is shifting towards making work optional, giving those nearing retirement age the freedom to decide how much (or how little) they want to work. Whether it’s through part-time work, freelancing, volunteering, or pursuing a hobby-turned-business, the goal is often to maintain a sense of purpose while enjoying the flexibility that retirement provides. This article explores some of the important considerations to help make this lifestyle work for you.

Think about when you want to make work optional

There’s no set age to stop working; it will depend on your health, work options, finances, and personal circumstances.

Are you looking at making work optional in ten years, two to five years, or next year? If you have a partner, when will they stop working? Knowing how much time you have makes the planning process easier.

Discuss your priorities with your partner a colleague or friend. If you need professional advice to determine your timeline toward an optional work lifestyle, our financial advisers can assist.

Consider your lifestyle and priorities

Set your priorities

Making work optional requires a clear understanding of your financial situation and what you want your life to look like during this period.

Consider:

  • your living costs
  • social life and recreation
  • staying active and healthy
  • volunteering or community participation
  • planning for changing health needs or aged care
  • supporting your family, children or grandchildren (if any)

Keep working, reduce hours or retrain

Continuing to earn an income, even part-time, can help maintain a sense of purpose and make your savings last longer. If you decide to keep working, options include:

  • Job Switch — explore options to retrain or seek part-time work
  • Transition to retirement — if you’ve reached your preservation age, you can use some of, and keep contributing to your super while working
  • Work Bonus — if you get the Age Pension, you can earn up to $300 per fortnight from work before your pension payment reduces.

Plan where you will live

If you own your home:

  • If you still have a mortgage, you could use some of your super (when available) to pay it off.
  • Consider downsizing to free up money. You could pay off your mortgage, support your lifestyle, or relocate to be closer to family or services. Before going ahead, check the tax impact and whether it will affect your government benefits.

If you’re renting:

  • You may be eligible for an extra payment if you rent and get payments from Centrelink, like the Age Pension. To find out more, see rent assistance on the Services Australia website.

Work out your income and living costs

How much money you’ll need for living costs, once moving to an optional work lifestyle, depends on your priorities and what you can afford.

For many people, their income will be a combination of superannuation and the Age Pension. If you don’t have a large super balance, you may be more reliant on the age pension. If you do have a larger super balance, think about how and when to withdraw it. You may also have extra savings or investments that can be used to fund living costs.

Work out your living costs

  • Housing — rent or mortgage, rates, home and contents insurance, maintenance
  • Utilities — electricity, gas, water, phone, internet, streaming services
  • Food — fresh food, groceries, takeaway, dining out
  • Clothing and household goods — clothing, personal care, furniture, household appliances
  • Health and leisure — health insurance, health care, social activities, fitness, holidays, gifts
  • Transport — car registration, insurance and running costs, public transport

As a rule of thumb, try allowing for two thirds of your current living costs. This is a useful guide, that assumes reduced costs for work and that you’ve paid off your mortgage.

Your spending may be higher when you first retire. For example, if you plan to travel or update your home. You may also need to allow more *income to be spent on healthcare as you get older.

Get your super income

You access funds within your super upon retirement or once you reach your ‘preservation age’. Which is between 55 and 60, depending on when you were born.

When you are eligible to withdraw your super, your main options are:

  • an account-based pension
  • an annuity
  • a lump sum
  • or a combination of these

You could also consider a transition to retirement strategy. This provides the option for individuals to use some of, and keep contributing to, your super while working.

Claim government benefits

From age 67 (or earlier, if born before 1957), you may be eligible for government benefits such as:

  • Age Pension
  • Pensioner concessions
  • Health care benefits
  • Tax offsets

As mentioned previously, if you decide that you want to continue to work while also receiving the Age Pension, you can earn up to $300 per fortnight from work before your pension payment reduces.

Add in savings and investments

If you have money in savings, you could use this to top up your retirement income, which will aid in making work optional for you.

If you have investments like shares or an investment property(s), think about whether to keep or sell. Check the costs, tax impact and whether it will affect your government benefits.

Seek professional advice

At The Investment Collective, our financial advisers are here to help you build a clear plan tailored to your lifestyle, goals, and financial situation. We understand that every step counts, whether it’s deciding when to reduce work hours, accessing superannuation, or maximising government benefits.

If there is anything in particular you would like to discuss, please don’t hesitate to contact our team.