Working longer: How our spending habits are changing

In Australia, it can be said that in many ways, we’ve never had it better. One of the indices often used to show this is life expectancy. As a nation, research shows that we’re living longer than ever.

As we attempt to live happier, healthier, and ultimately, longer lives, one area that is often in the media is how our working lives need to adjust. Given we’re coming into an election year, we will surely see the aged pension and retirement age discussed again.

It raises some interesting questions: If we’re living longer, how are our finances being impacted? And is it changing our overall spending habits in the years before retirement?

Rise of the silver spenders

I saw an interesting infographic on this topic recently. In this content, it discussed the rise of the ‘silver spender’, that is, those of retirement age who have saved more through their working lives, leading to increased wealth in their later years.

From my perspective, the word retirement is changing in terms of its meaning. What once meant the end of work entirely, is now more about a shift in focus in the later years of our lives. What that means is different: It may not mean a full retirement from work, just a change in priorities and focus.

Living longer means that our later years are now, on average, extending further than previous generations. So, working part time, or focusing on passion projects like volunteering, can be part of the mix as we transition into that later stage of life.

The increased wealth aspect also means that, as a demographic, those in the later years are spending more than before. Lifestyle options such as travel and fashion have seen increases in spending among the 50+ demographic.

Another factor at play here has been the impact from the ‘Wealth Effect’, that is, the perceived wealth that many Australians have on the back of the extraordinary gains in house pricing we’ve seen in the past 10-15 years. While house price growth is slowing or reversing in some areas, there’s still an advantage that many older Australians have in the value of their property, encouraging them to feel free to spend more.

Rise in the later life ‘gap year’

One interesting trend that we’ve seen is the rise in people taking a break later in their careers. Traditionally, school students celebrating the transition from high school to uni/work life has been the ‘gap year’ that we hear most about. Now, as we generate further wealth, and lead more and more work-dominated lives, we are seeing the rise of people taking a ‘career break’ in their 30’s, 40’s and even their 50’s.

It might be a year off to go travelling or volunteering overseas, the premise being that it gives you a chance to refresh and refocus. As we start to work longer, it’s understandable why this type of gap year would be appealing.

 Spending habits can be formed early 

The infographic I mentioned earlier also discussed the habits of our younger millennial generation. While we hear plenty said about this in the press, what is interesting is that there’s really two distinct groups there now, those with and those without a family. It’s changing their spending habits dramatically, as they both live for today and plan for tomorrow.

Live for today, plan for tomorrow

It’s that statement that I think best sums up our approach to spending. As we live longer, the challenge of financing our later years is one that we all need to face.

However, the right approach to balancing life today, while keeping an eye on the future, can be a real benefit. If you take this approach to your finances, it means that you can continue to do the things that you want in life for a longer period of time. And let’s be honest, who wouldn’t want that for their financial future?

General Advice warning

The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL 436121 ABN 49 159 583 847) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.