When retirement doesn’t go to plan

Retirement is often marketed as a permanent vacation, but for many, the reality involves a complex emotional and practical transition that often commences at a specific milestone. For many, that’s turning sixty. And then, there are those situations when plans are completely derailed.

In 2024-2025, 156,000 people retired, at an average age of 63.8 years1. Each of these people had hopes and dreams about retirement, but will those plans come to fruition?

Of those 156,000 people, most intended to retire at 65.6 years, so on average they finished work earlier than anticipated. While that might sound like good news to some, consider this:

• 13 percent finished paid work earlier than planned due to sickness, injury or disability
• 6 percent found themselves retrenched or dismissed and were unable to find alternative employment.

On the other hand, some people delay retirement past the date they’d planned to start this next phase of life. A Finder survey conducted late last year found almost one in five Australians either delayed retirement or re-entered the workforce in the past two years.

The majority of those had done so to ease cost of living pressures...that's 1.26 million Australians who kept working because they were worried they had insufficient retirement funds2.

When retirement goes to plan, it can be an exciting new chapter of life. When it doesn’t, it can be challenging and stressful, particularly if there’s a mortgage in the mix.

Even with the ‘ideal’ retirement, the transition is rarely a straight line. The best laid plans and most meticulously funded bucket list can be derailed by life’s unpredictability. Here are some of the disruptors that can turn a dream retirement into a period of stress.

1. The health curveball

The most common disruptor to a well-designed retirement is the gap between planned health and actual health. No one expects illness or disability, but as we age, it’s increasingly likely. The Australian Institute of Health and Welfare (AIHW) released data last year that indicates that health limitations are the primary reason for reduced life satisfaction among Australia’s retirees.

Mobility can become a huge issue with ageing. An unexpected diagnosis such as osteoarthritis or cardiovascular issues can suddenly make a planned hiking trip in the Dolomites or a move to a multi-story home impossible.

Your clients may need to renovate or modify their homes and gardens. They may need to install handrails in bathrooms, non-slip flooring in wet areas or make adjustments to accommodate a wheelchair. Gardens may need to be redesigned to become low maintenance and remove tripping hazards. Alternatively, the client may need to move to a more suitable home.

2. Carrying a mortgage into retirement

In 2023, 66 percent of recent retirees owned their home outright, with no mortgage debt; that means 34 percent carried a mortgage into retirement3. The need to maintain monthly repayments from a fixed retirement income can be a burden, one which can lead to increased financial stress…especially when the interest rate trajectory is upwards.

Having to meet those regular repayments can mean clients defer retirement or have to return to the workforce. This might not be possible for all, particularly where ill-health has pushed them into an early retirement.

3. The caring community

Another frequent health related plot twist can be caregiving. Retirement plans often focus on the individual, but many older Australians find their time consumed by the unexpected role of being the caregiver for a spouse, child or ageing parents. This might impact the amount they can work in later life and consume a lot of time (and money) in retirement.

Although your client or their loved ones may be eligible for government funded in-home support, the time between calling for an assessment and receiving funding can be well over a year.

4. Social connection

When retirement doesn’t go to plan, social connection is often the first victim. Chronic pain, health limitations or time spent caregiving can lead to a shrunken world, one where social engagement drops.

This can have a negative impact on mental health; there’s been a number of studies linking happiness and fulfillment in retirement to social connections, the most recent being from National Seniors Australia (NSA)4. The NSA research highlighted that happiness in retirement hinges on having a purpose to enjoy, staying well and social connection. It also noted the important role of financial security.

Life does not always go to plan and retirement is no exception! It is often said that money can’t buy happiness, but it certainly provides the scaffolding upon which a happy life is built.

As waves of baby boomers and Gen X reach retirement, the stats suggest a greater number will carry larger amounts of mortgage debt into this new stage of life. How can you best support those clients?

A reverse mortgage can help alleviate the financial stress and provide an important sense of security. It can be used to refinance an existing mortgage along with other debt. And, because regular repayments aren’t required, retirement cash flow is freed up. This, along with guaranteed lifetime occupancy and a no negative equity guarantee provide peace of mind.

But a reverse mortgage isn’t just for debt financing. It can fund renovations or modifications to the home and garden, support the transition to a new home or provide a regular income stream.

In retirement, financial stability serves two critical functions. The first is peace of mind; the knowledge that your clients’ basic needs are met reduces stress. The second is control; when life throws a curveball, financial readiness transforms a potential crisis into a manageable task.

A reverse mortgage can help you to help your clients preserve their power to make their own choices, rather than having them dictated by circumstances.

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1.https://www.abs.gov.au/statistics/labour/employment-and-unemployment/retirement-and-retirement-intentions-australia/latest-release

2. https://www.finder.com.au/news/delay-or-ditch-retirement-2026

3. The University of Melbourne, 20th HILDA Statistical Report, 2025

4. https://nationalseniors.com.au/news/media-release/new-research-reveals-what-makes-older-australians-happy

Applications for credit are subject to eligibility and lending criteria. Fees and charges are payable, and terms and conditions apply (available upon request). Household Capital Pty Limited ACN 618 068 214, Australian Credit Licence 545906, is the Servicer for the credit provider Household Capital Services Pty Limited ACN 625 860 764.