An interesting topic across media channels lately is the transition to retirement for elite athletes. For many of our sporting heroes, the immediate aftermath of retirement can be daunting, isolating and often devastating. The perceived loss of structure, even identity, has many struggling while some seem to find their way to success outside of sport – why?

FRD Director Dwade Sheehan says, ‘For me, the day I retired from a relatively successful international swimming career was a dark one.

‘I remember waking up at 4.30 am (as I had done for the last 15 years) and taking enjoyment in rolling over and going back to sleep. However, when I rose a little later in the morning I found myself alone in an empty house where my parents and siblings had all taken themselves off to work and school.

‘With nowhere to be, no job and very little money in the bank, I distinctly remember asking myself, “what next?”

‘Right there commences a period where you question your path, your sense of identity, your friends, your purpose, and sadly for some, your life. What you do next comes down to preparation, or lack thereof.’

Fearing the transition to retirement

Believe it or not, the transition to from sport to general life faced by many elite athletes, is also experienced by everyday working Australians as they too make the long awaited move from the workforce to the golden or twilight years of retirement.

Studies by the Australian Sports Commission and AIS shows that almost 80 percent of elite athletes put off retirement, even as their performance declines, for fear of entering the unknown. Likewise retirement index studies by APRA reveal figures for those in the workforce but within 10 years from their initial retirement age. It’s not surprising to learn that the number of those fearful of their retirement years has increased over the past two decades.

During the television program Insight: Game Over which aired on SBS recently, the AFL disclosed that their new athlete transition program commences from the day a young player enters the AFL. Understanding that their career is just a moment in time, and that the adulation and income can be cut off at any moment or event, “preparing the exit strategy as soon as you enter the room” is critical to life after the game.

The same applies to our working careers and our preparation for retirement.

Retirement planning is part of career planning

For many of us, getting a great job which earns reasonable money is a reward for those years we spent at school, TAFE or university. In our minds we’ve done the hard yards and now we want to celebrate a little. We enjoy the opportunity to spend our money, on cars, on holidays, a new home and on the kids. We experience good times and bad times and we often find ourselves adjusting our budget to either make ends meet, or live the standard of living we have created for ourselves. But what we often fail to do is make room in the budget for retirement when in fact we should consider our retirement from our first day at work.

Understanding what retirement will look like

One of the most important of all elements to a well transitioned retirements is putting a plan in place. As part of the FRD Client Investment Program, getting our clients to understand what their retirement will look like is an important step.  The kinds of questions we ask are:

  • What does retirement mean to you?
  • What do you want to do during your retirement?
  • How much will your retirement cost each year?
  • What will you need as a nest egg on retirement?

Lastly we get clients to understand their current financial situation and the critical differences between their retirement dreams versus their current realities. For many, it’s not a fun exercise.

Will you have $2.8 million to retire on?

Recently, the government commissioned IbisWorld to compile the 2026 Report. This is used to get an understanding of the size and shape of Australia and where public and private infrastructure spending needs to occur to meet the needs of a growing and dynamic nation.

As part of this was a wage index which forecasted the average male wage in 2026 would be approximately $196,000 per year. This, coupled with studies by APRA and the Citibank Retirement Index also revealed that moving forward most retirees believed they will need approximately 70 percent of the average wage (or $137,200 per year) to meet their desired standard of living during retirement.

This means that someone who will live for 20 years post retirement in 2026 will need a proposed nest egg of approximately $2,744,000 (before inflation or indexation). Nearly $3 million.

As part of the FRD Client Investment Program we’ve asked more than 8,800 working Australian families the same question and most agree they will need approximately 70 percent of the average wage, or 60 percent of their actual pre-retirement annual income each year during their retirement. On average, once they reverse engineer their own needs and costs for retirement, most of our clients concede that they will need a nest egg of more than $2 million to fund their twilight years. Unfortunately we have only ever met two clients who were on track to achieve their goals – and even they felt they needed to do more.

Its about having choices

Ultimately, making the decision to plan for retirement or financial security is not necessarily about getting rich, being overly wealthy or living the celebrity lifestyle. It’s all about having choice. The choice to live the way you choose. The choice to go on holidays, to have that all important surgery. The choice to offer to pay for the grandkids’ school fees. Whatever your goals. Whatever is really meaningful to you. By failing to plan, you are planning to fail.

Failing to plan can place significant stress on working Australians as they enter retirement. Already struggling with the change in routine, the lack of structure and workplace social interactivity, we often find that not having financial security during retirement can lead to marriage problems, sickness and mental health issues. One way to help prevent some of these issues is to ensure that we mitigate the risk and the unknown of the landscape for retirement.

The FRD Client Investment Program

The FRD Client Investment Program works with everyday working Australian families to achieve greater financial security through successful property investment.

Our program is more than just buying an investment property, rather it’s a systematic regime that helps our clients passively improve their net investment wealth through increasing income producing growth assets, while reducing debt. Over time, it delivers a platform, alongside other retirement planning strategies, for equity and net wealth, regular passive income and greater choice.

We’ve all witnessed recently that when an elite athlete struggles in their transition from sport they have the ability to negatively impact the lives of themselves and those around them. Likewise when someone hasn’t put in place a plan to make the successful transition from their forty-year working career to retirement, it can have a serious effect on their life and the relationships they have with loved ones.

Preparing for retirement should commence from the day you enter the workforce.