Why are more people working in retirement?

The traditional idea of retirement as a complete withdrawal from the workforce is becoming less common. Vanguard Australia research found that only 34% of working-age Australians expect to stop working entirely when they retire, while 42% expect to continue working in some capacity.

Several factors are contributing to this shift:

Australians are living longer and spending more years in retirement.
Flexible and remote work arrangements have made it easier to work later in life.
Many people enjoy the sense of purpose and social interaction that work provides.
Some retirees want additional income to support their lifestyle.

The result is a growing trend towards phased retirement, where people gradually reduce their working hours rather than stopping work altogether.

The financial benefits of working longer

More income and financial flexibility

One of the most obvious advantages of working past retirement is the additional income. Even part-time work can help cover everyday expenses, reduce reliance on savings and provide greater financial confidence.

Additional income can allow retirees to:

delay drawing down their super
maintain a higher standard of living
fund travel, hobbies or other lifestyle goals, and
build a larger financial buffer for unexpected expenses.

Working for even a few extra years can significantly improve retirement outcomes by allowing investments and superannuation balances more time to grow.

Potentially grow your super

Depending on your circumstances, continuing to work may allow you to keep making super contributions, helping to increase your retirement savings.

For people approaching retirement, strategies such as a Transition to Retirement (TTR) arrangement may allow them to reduce working hours while using some of their super to supplement their income. TTR strategies can provide flexibility for those who want to ease into retirement rather than stop working abruptly.

Greater confidence in retirement

Research suggests that retirement planning plays a significant role in retirement confidence. Australians who have a clear plan for retirement tend to feel more positive and better prepared for the future. Continuing to work can provide additional financial security and help reduce concerns about outliving savings.

In fact, Vanguard Australia’s 2026 How Australia Retires report reinforces that financial security and stability play a key role in retirement confidence. Australians who feel secure about their savings, have manageable debt levels and believe they can control their spending are more likely to feel confident about retirement.

The personal benefits of choosing to work longer

Maintaining a sense of purpose

For many people, work provides more than just a pay cheque. It offers structure, achievement and a sense of identity.

Retirement can be a major life transition, and some retirees miss the routine and purpose that work brings. Continuing to work, even on a limited basis, can help maintain a sense of meaning and contribution.

Staying socially connected

Workplaces often provide valuable social interaction. Leaving the workforce can sometimes reduce opportunities for regular contact with others.

Part-time work, consulting or casual employment can help retirees maintain social connections, meet new people and stay engaged with their communities. Social engagement is increasingly recognised as an important contributor to wellbeing in later life.

Supporting physical and mental wellbeing

Many retirees find that remaining active through work helps them stay mentally engaged and motivated. Work can provide intellectual stimulation, opportunities to learn new skills and regular daily activity.

While retirement offers freedom and flexibility, maintaining some level of structured activity can be beneficial for overall wellbeing.

Things to consider before working longer

Your health and energy levels

While working longer can be rewarding, it is important to consider your physical and mental wellbeing.

Some jobs may become more challenging with age, particularly those involving physical labour or high levels of stress. Before committing to continued employment, think about whether your role remains sustainable and enjoyable.

Balancing work and lifestyle

One of retirement's biggest attractions is the freedom to spend more time doing the things you enjoy. Working longer may mean less time for:

travel
family and grandchildren
volunteering, and
hobbies and personal interests.

It's worth considering whether the additional income outweighs the lifestyle opportunities you may be postponing.

Because everyone's circumstances are different, it can be helpful to review your broader retirement plan before making decisions about continued work.

Finding the right balance

Retirement doesn't have to be an all-or-nothing decision. Many Australians are choosing a more flexible approach that combines work, leisure and retirement income.

Whether it's working one or two days a week, consulting in a previous profession, starting a small business or taking on seasonal work, continuing to earn an income can offer both financial and personal benefits.

The key is finding the right balance between maintaining financial security and enjoying the freedom that retirement can bring.

Choosing to work for longer: benefits and implications