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Financial wellbeing rates higher for retirees
Retirement has a positive effect on Australians' sense of financial wellbeing despite their financial position, according to a paper from the Department of Families, Housing, Community Services and Indigenous Affairs (FAHCSIA).
The paper, ‘Responses to financial stress at life transition points', found age was associated with positive financial wellbeing even among 65-year-old recipients who received welfare.
Although planned retirement could be a positive experience, it lessened for those whose retirement was forced on them and its timing unexpected.
Full-time employment had the largest effect on the various indicators of financial wellbeing, according to the report.
Conversely, being fired or made redundant did not appear to have the same impact. While short-term involuntary churning of jobs had little effect, a loss that stretched into the unforeseeable future did act negatively.
Marginal increases in welfare payments would do little to change the poor financial wellbeing and instances of financial deprivation of those living on welfare, the report said.
Policies that promoted employment were more likely to take effect on welfare recipients' financial wellbeing, as people whose employment status changed from one survey to the next reported larger changes in wellbeing, according to the report. However this decreased with age.
The report said although life events such as retirement had positive effects on a recipient's perspective of their financial position, becoming a single parent or separating from a spouse had the opposite effect.
Although changing jobs, receiving a promotion and moving house had positive impacts on a number of financial wellbeing indicators, other important life events including a new birth or pregnancy had little or no effect at all, FAHCSIA said. Neither did getting married.
People who reported major improvements in their financial situation over the previous 12 months also reported higher levels of financial wellbeing and lower incidence of financial stress events.
The reverse was true of people who reported a worsening financial situation over the past year.
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