Should I stay or should I go?

The face of work in Australia -- including the public sector -- has changed dramatically over time. People don’t expect to have a job for life anymore. That means more people in their 50’s and 60’s are wondering whether to hang on at work or take an opportunity for early retirement. What should you do if you’re offered redundancy near retirement?

If you kicked off your career in the 1970s or 1980s the workplace was different -- very different. A day at the office most likely meant sitting at a desk with a typewriter, flipping through a rolodex to find contacts before calling them on a landline. You used an overhead projector to make presentations and may have even smoked at your desk.

Meanwhile, things we now take for granted, like laptop computers, the internet, mobile phones and video-conferencing remained the stuff of science fiction. But it’s not just the tech that’s changed, for most Australians restructures and redundancy programs are now part of working life.

Working in the NSW public sector today

The state of the NSW Public sector report published in 2018 provides some interesting data about working in the public sector today. It shows for instance, that 65 per cent of NSW public sector workers are now women. It also reveals that the average NSW public sector worker is 44-years-old -- four years older than a worker in the private sector.

Meanwhile, the median agency tenure across the state’s public sector currently stands at nine years -- down from 9.3 in 2017. The good news is that the NSW public sector grew last year for the first time since 2012.

The millennial effect

It’s not unusual for the average Aussie to switch jobs every few years. More workers are also doing several part-time or casual jobs at the same time to make up the equivalent of full-time work – often described as portfolio careers.

The knock-on effect of the growing popularity of alternate types of work means the idea of what retirement looks like has also changed. It’s no longer a hard stop to work. The growth of the gig economy, freelancing, and part-time employment provides more opportunity for those in ‘retirement’ to work less, rather than having to stop work altogether. There’s also the ongoing popularity of volunteering and late-life learning that many older workers find rewarding as they cut back on work.

While new types of work have emerged, it does get tougher to land a job as you get older. A survey of age discrimination in the workplace shows that over a quarter of Australians aged 50 years and over report that they had experienced some form of age discrimination – most commonly when people are out of a job and looking for paid work. This fact, understandably, contributes to older workers shying away from trying a late-career job switch.

Top 5 things to consider if you decide to leave the public sector

Another theme we see is people leading a more active and varied lifestyle in early retirement to make the most of good health. Many people have two phases to their retirement plan:

1. Consider what you will do with your redundancy payment – whether you’ll use it as a mechanism to fund your lifestyle, pay down your mortgage or invest it.
2. Double check that your employer has used the correct taxation method for the treatment of your lump sum payment.
3. Decide whether taking a redundancy really means an early retirement. Deciding to stop work early can have a long-term financial impact on your retirement.
4. Review the impact of a voluntary redundancy on your public sector superannuation defined benefit calculation if you have one. Taking your benefit early could result in a benefit calculation that is higher or lower than it would be than taking it at retirement or preservation age.
5. Before taking a redundancy, decide whether it is likely that you will return to work with another employer. This decision impacts whether it is more beneficial to claim or defer your public sector scheme benefit.

All in all, it can help you to budget for your whole retirement if you plan to reduce your living costs as you grow older, to allow for the expenses that come with changes in your health or your desire to leave money to your family.

Need help managing your money?

Getting expert advice can make a big difference to how prepared you are for retirement - both emotionally and financially. By discussing your lifestyle goals with a StatePlus financial planner you’ll have a much better understanding of the super and income you’ll need to make retirement a positive change in your life.

For more tips and tools, download our free Retirement guide or call us on 1800 620 305.