Are you retirement ready? Planning for the life ahead

There’s a wonderful feeling that comes with being on the home straight towards retirement. Post-career life conjures up thoughts of freedom and leisure with time to do all the things you’ve been putting on the backburner.

So, are you ready? Have you put in the time to plan what retirement looks like for you?

Preparation is an important part of realising your best retirement life. It can be the difference between a clear head and a continuation of endless to-do lists.

Here are some general things to consider before diving headfirst into retirement that could help you plan just a little bit more.

When do you plan to retire?

Deciding on when to retire depends on a number of factors, such as how much money will you need to support your retirement lifestyle expectations. Will superannuation plus savings be sufficient? You should also consider what government support options are available to you. Do you want to be debt-free? And what about that mortgage?

Not all considerations will be financial, however. Other factors include life expectancy and health conditions. Has COVID-19 impacted you? And are you retiring as a single person, or a couple?

Let’s take a look at these factors in some detail.

Your financial situation

There is no hard and fast rule to how much money you need to launch yourself into that coveted life of leisure. There are countless online calculators that claim to help you understand the right figure for you, but really, it all comes down to your lifestyle.

Setting a retirement budget is the most practical way of figuring out what amount is right for you. It’s a highly useful way of quelling any potential anxiety you might have about a lack of regular pay coupled with an abundance of spare time.

Your retirement budget doesn’t have to be exact, and you don’t need to spend weeks agonising over it. Spend a few hours jotting down things like holidays, travel, social events, and daily expenses. Add your figures to your living necessities and use this as your financial-needs guide.

Superannuation

In Australia, we can access our super from the age of 55. Using the budget you mapped out, ask yourself how you will use your super to supplement your savings and investments. If you’re concerned that your projected super balance may not be enough to enjoy the retirement lifestyle you would like, consider ways you can increase your contributions while still working.

  • Salary sacrifice – Are you able to put extra money into your super from your pre-tax salary? Salary sacrifice contributions are taxed at just 15 percent for most people
  • Personal contributions – Making additional contributions to your super using your after-tax income not only boosts your superannuation, you may also be eligible to receive a tax offset
  • Contribution caps – Understand what caps apply to various types of contributions as extra tax may apply when exceeding them. You can check the Australian Taxation Office (ATO) website to ensure you know the current contribution caps so you can contribute tax-effectively.

Government support options

When you retire, you may be eligible for government benefits such as the Age Pension, concession card, government loans, healthcare benefits, tax offsets and low-cost banking.

The kinds of benefits you’re entitled to generally depends on your age, assets and income. For more information, visit this government website to understand eligibility.

Current and future debts

Being debt-free is ideal when entering retirement. However, most Australians enter retirement these days with some form of debt. This can be attributed to the mortgage, credit cards, car or personal loans and more. It’s worth paying off debts as much as you can while you’re still working so that you don’t have to draw down your retirement savings.

Mortgage repayments are by far the largest line item on many budgets. There are steps you can take, however, to reduce the amount you owe while still living comfortably.

Is it worth considering downsizing or refinancing your home? If so, take some time to consider some costs that are involved. These may include:

  • Real estate agent fees
  • Stamp duty
  • Legal fees
  • Other taxes

Health and wellbeing

Outside of financial considerations, maximising your retirement can also mean thinking about your health and other non-financial factors.

In 2020 we faced a global pandemic that has left many people feeling the effects both physically and mentally. All of a sudden, we were restricted to staying home and breaking with our regular routine.

In many ways, this sudden change is not too dissimilar to what many Australians may experience when leaving the workforce. However, maintaining your health in retirement doesn’t need to be difficult.

  • Get moving – The Government Department of Health recommends older Australians do at least 30 minutes of physical activity on most days, although not necessarily all at once
  • Eat well – Eating a nutrition-rich diet can help reduce the risk of illness and improve your wellbeing. The Australian Dietary Guidelines provide evidence-based recommendations on the types and amounts of food Australians should eat
  • Work the brain muscles – Researchers believe many supposed age-related changes are in fact lifestyle related. Memory loss, for example, can simply be improved by 30 to 50 percent just by keeping the brain active, according to a Victoria government study. Consider learning a new hobby, doing crosswords or sudoku and don’t forget to read those books!

Retirement should be fun. It should be stress-free and full of adventure. So, don’t forget to take some time to plan your post-career life. Remember, you can always reach out to our brokers who may be able to assist you in securing additional finances to help you make the most of your retirement.