It’s time in employment not time in the market that matters


By David Baruffi, Financial Advisor

When it comes to retirement planning, the length of time you work is far more important than how your investments perform.

The math is simple

For each extra year you work you have one more year of accumulation of wealth and one less year of draw-down. The longer you work the more wealth you accumulate which gives you more to spend in a shorter retirement.

Many people don’t retire of their own volition. Retirement is often forced on them through redundancy or ill health (either their own or their spouse)[1]. However; for those who can choose their retirement date, the length of time you work can have a significant (positive) impact on your finances.

Early retirement

The choice of early retirement is usually made when there is an absence of reasons to work rather than a burning ambition to take on a new challenge. The decision to retire is often fuelled by an empty nest and zero mortgage combined with mounting frustrations of a career or occupation that has lost its lustre.  In such circumstances, it is easy to ignore the fact that over 50% of people’s wealth is accumulated in the last ten years of their working life[2]. With this in mind, pushing through to age pension age will have a much greater effect on your wealth than beating the markets.

The challenge can be around maintaining your motivation to work. One way to do that is to reward yourself along the way. I use travel as a reward. We plan a significant holiday every 18 months on the basis that it takes you nine months to get over the last holiday and 9 months to plan for the next. When I return from work I can distract myself from the frustrations of work by reminiscing about my holiday or thinking about the next one.

Planning for retirement

Planning for retirement involves a lot more than financial calculations. While we begin our career driven by the need to provide financial security for ourselves and our families it also provides us with a sense of purpose and intellectual and social stimulation. When we have achieved financial security we still need a source of intellectual and social stimulation. This is unlikely to be provided by catching up with friends for coffee and discussing the football or local politics. We need to replace the desire for financial security with a desire for interesting experiences.

Previous generations’ retirement would coincide with the growing number of grandchildren and extended family commitments. With our children marrying and starting families later many of us are retiring pre-grandchildren. While this allows us to be obligation free it also prevents us from the fulfilling task of grand-parenting. This can be exacerbated when your children live in another state or another country. In either case we need the financial resources to go to our grandchildren as they will not likely be able to come to us.

Working longer and building your financial resources to allow you to have a richer retirement are essential to maintaining a good quality of life.

If you have questions or would like to discuss your personal financial plan, please contact us today.

David Baruffi is an authorised representative and credit representative of AMP Financial Planning.

Blueprint Planning Pty Ltd (ABN 78 097 264 554), trading as Blueprint Wealth, is an authorised representative and credit representative of AMP Financial Planning, Australian Financial Services Licensee and Australian Credit Licensee.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider you financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, Blueprint Planning Pty Ltd and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you would like more information.

[1] Australian Bureau of Statistics: Retirement and Retirement Intentions, Australia, July 2014 to June 2015:

[2] Household Wealth and Wealth Distribution, Australia, 2011–12: