Most of us look forward to retirement. It’s a chance to explore new horizons, do all the things we never had time for when we were raising a family or pursuing a career. Or it could be just a time to relax and enjoy life at a more leisurely pace.
In fact, retirement can be anything you wish it to be. That may mean hanging up your work boots for good. Or you may prefer to gradually ease yourself into retirement by dialling back your working week. It could even be a time to choose your own hours by shifting into a consulting role.
You may have plans to retire at a certain age, by a set date or following a particular event.
However, for some of us, retirement could come around sooner than expected because of ill health, an inability to continue in a physical role or the need to care for a loved one.
So, it pays to make plans for your retirement long before you’re ready to leave; you never know what lies around the corner.
Making retirement a truly ‘golden’ period of your life can hinge on making the most of your time. That doesn’t have to mean travelling the world on regular vacations. It can be as simple as joining local community groups, undertaking new studies to broaden your knowledge or spending more time with family and friends.
Talk to friends and family members for ideas on how they are spending time in retirement. Remember, these can be some of the most productive years you may ever have enjoyed.
You may be thinking about a change of location or even moving overseas for your retirement.
While this may be the dream of a lifetime, be sure to think through any major moves – and not just from a financial perspective. Friends and family are very important as we age and it may not be easy to make new connections outside of a familiar community.
If you’re set on the idea of relocating, it can be worth renting for a year or so to be sure the reality lives up to your expectations.
No matter what your plans for retirement, the reality is it can involve something many people don’t have enough of – money.
Making some plans in advance for how much income you’re likely to have in retirement and how much your preferred lifestyle will cost is a key step in relishing your senior years.
A good starting point in planning retirement is determining your financial position. It’s a lot easier than it sounds. You may wish to start thinking about the value of your assets and liabilities.
Many Australians aspire to have at least a ‘comfortable’ retirement. But what kind of annual income will you need to enjoy ‘comfortable’ by your standards? And how much does that mean you'll need at retirement?
According to the ASFA Retirement Standard for the September 2020 quarter published by the Association of Superannuation Funds of Australia (ASFA), to enjoy a comfortable retirement, at age 65 singles at will need an annual income of $43,901. Couples at retirement will need an annual income of $61,083. These figures assume the retiree(s) own their own home and do not pay rent or make mortgage payments.
By ASFA’s standards, a ‘comfortable’ retirement means you can go on one annual holiday in Australia, you can eat out regularly and afford bottled wine. See what else a comfortable retirement means. Looking at the list, you can see whether your definition of ‘comfortable’ matches with ASFA’s standards.
Planning to rely on the age pension could see your retirement dreams cut short. The pension is designed to support a very basic standard of living.
It makes good sense to speak with a financial adviser before you step down permanently from the workforce. Your adviser can suggest strategies to give your super savings a last minute boost as well as advising on investments to help maximise your retirement income.
Good advice is especially important if you plan to wind down your working hours leading up to retirement. Take a look at transitions to retirement to learn more. Or head to stopping work to learn more about the next exciting stage in your retirement plans.
Next: Transition to retirement
This information is current as at 15/08/2020.
This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs.
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