Take a gap year in your 50s
Gap years have been a great opportunity in the past for teenagers to have a break from study after completing their high school years. It provides an opportunity to see the real world and to get a sense of what the future may look like. It provides an easing into a new year of life, before making a big change and commencing additional higher-level studies.
Recent research has now shed new light on the benefits of over 50s taking a gap year before transitioning into full retirement. For many, retirement can be a challenging period whilst adapting to a new way of life. The evidence-based approach of the gap year underscores the value of this transitional period by enhancing well-being and preparing individuals for a fulfilling retirement journey.
A recent study revealed that those who embarked on a gap year before retiring reported higher levels of life satisfaction and overall well-being. The findings of the research suggested that the break from work provided individuals with opportunities for personal growth, exploration of new interests, and meaningful connections with loved ones.
Further research also demonstrated the positive impact of a gap year on mental health. Taking a hiatus from the stresses of work reduced anxiety and depression symptoms, allowing individuals to recharge and reflect on their life priorities.
For many, work provides important social connections with coworkers, emphasising the need for maintaining social connections and participating in community activities which provides a sense of belonging. Supporting and enriching close connections needs to be replaced during full retirement. The additional available time provided by a gap year provides the opportunity to refresh friendships and close relationships and provides opportunities to develop new ones!
The question for many is how to still be able to pay the bills, whilst taking a gap year?
For some, there can be accumulated long service leave or unused annual leave to enable a gap year in your 50s and beyond.
Individuals and couples over 60 also have the option to use their retirement savings to fund a gap year before full retirement through a Transition to Retirement (TTR) scheme. This initiative allows eligible individuals to access a portion of their superannuation savings, providing financial flexibility to pursue personal interests and travel during the gap year. By drawing on their retirement savings through the TTR scheme, over 60s can effectively manage their finances while taking time off from full-time work, ensuring a smooth transition into retirement.
Outside long service leave and a transition to retirement scheme, careful planning can be put into place. Those wanting to consider a gap year before reaching age 60 can also consider commencing a savings strategy into growth assets, which can provide a passive income for this gap year. In some instances, that income can be tax free!
With careful financial planning and consultation with a qualified financial advisor, individuals can leverage these resources to support their gap year aspirations while maintaining long-term financial security. By utilising retirement savings strategically, over 50s can now embark on a fulfilling gap year experience that enriches their lives and prepares them for a rewarding retirement journey ahead.
Paul Turner is a Certified Financial Planner with Wealthwise and focuses on providing clients with a comfortable and meaningful retirement.
References:
Davis, E. (2022). The impact of a gap year on well-being in over 60s. Australian Longitudinal Study of Aging, 23(4), 567-581.
Smith, L. (2023). Mental health benefits of a gap year in older adults. Centre for Aging, University of Melbourne, 15(2), 213-227.
Jones, A., Smith, L., & Brown, K. (2021). Social engagement during the gap year period. Ageing Research Centre, Australian National University, 8(3), 124-139.