Considerations when planning retirement

Planning for retirement is a critical step in ensuring your financial security and peace of mind as you approach the golden years of your life. This article provides a guide, highlighting the various considerations when planning retirement and how to fit these with your unique needs and aspirations.

Think about when you want to retire

There’s no set age you need to be to retire. It will depend on your health, work options, finances and personal situation.

Are you retiring in ten years, two to five years, or next year? If you have a partner, when will they retire? Knowing how much time you have can make the retirement planning process easier.

Talk about your retirement priorities with a partner, colleague or friend. If you need professional advice to plan for retirement, our financial advisers can assist.

Consider your lifestyle and priorities

Think about what your lifestyle will look and feel like. What are the things that matter most?

  • your living costs
  • social life and recreation
  • staying active and healthy
  • volunteering or community participation
  • planning for changing health needs or aged care
  • supporting your family, children or grandchildren (if any)

Keep working, reduce hours or retrain

Continuing to earn an income, even part-time, can help your retirement savings last longer. If you want to keep working, options include:

  • Job Switch — explore options to retrain or seek part-time work
  • Transition to retirement — if you’ve reached your preservation age, you can use some of, and keep contributing to, your super while working
  • Work Bonus — if you get the Age Pension, you can earn up to $300 per fortnight from work before your pension payment reduces

Plan where you will live

If you own your home:

  • If you still have a mortgage, you could use some of your super (when available) to pay it off.
  • Consider downsizing to free up money. You could pay off your mortgage, support your lifestyle, or relocate to be closer to family or services. Before going ahead, check the tax impact and whether it will affect your government benefits.

If you’re renting:

  • You may be eligible for an extra payment if you rent and get payments from Centrelink, like the Age Pension. To find out more, see rent assistance on the Services Australia website.

Work out your income and living costs

How much money you’ll need for living costs in retirement depends on your lifestyle priorities and what you can afford.

For many people, retirement income will be a combination of superannuation and the Age Pension. If you don’t have a large super balance, you may be more reliant on the age pension. If you do have a larger super balance, think about how and when to withdraw it. You may also have extra savings or investments that can be used to fund living costs.

Work out your living costs

  • Housing — rent or mortgage, rates, home and contents insurance, maintenance
  • Utilities — electricity, gas, water, phone, internet, streaming services
  • Food — fresh food, groceries, takeaway, dining out
  • Clothing and household goods — clothing, personal care, furniture, household appliances
  • Health and leisure — health insurance, health care, social activities, fitness, holidays, gifts
  • Transport — car registration, insurance and running costs, public transport

As a rule of thumb, try allowing for two thirds of your current living costs. This is a useful guide, that assumes reduced costs for work and that you’ve paid off your mortgage.

Your spending may be higher when you first retire. For example, if you plan to travel or update your home. You may also need to allow more income to be spent on healthcare as you get older.

Get your super income

You access funds within your super upon retirement or once you reach your ‘preservation age’. Which is between 55 and 60, depending on when you were born.

When you are eligible to withdraw your super, your main options are:

  • an account-based pension
  • an annuity
  • a lump sum
  • or a combination of these

You could also consider a transition to retirement strategy. This provides the option for individuals to use some of, and keep contributing to, your super while working.

Claim government benefits

From age 67 (or earlier, if born before 1957), you may be eligible for government benefits such as:

  • Age Pension
  • Pensioner concessions
  • Health care benefits
  • Tax offsets

Add in savings and investments

If you have money in savings, you could use this to top up your retirement income.

If you have investments like shares or an investment property(s), think about whether to keep or sell. Check the costs, tax impact and whether it will affect your government benefits.

Secure your legacy

Estate plans are designed to protect your family and loved ones, minimise taxation upon transfer of assets in a legal and logical manner, and ensure that your wishes are followed once pass away.

An inadequate estate plan can have far-reaching implications, impacting not only your assets but also your loved ones and their future. There are significant potential risks and challenges that can arise from insufficient preparation. This can include increased family conflict, unintended beneficiaries gaining access to your estate and higher estate taxes and a diminished legacy.

A financial adviser will work to understand your needs and will assist in creating a plan to protect your assets and ensure your wishes are honoured, so that you can provide for your loved ones in the best way possible.

Seek professional advice

At Alteris, our financial advisers will work to understand your situation and goals and help to plan your retirement journey. They will discuss any available options with you during your initial and ongoing meetings. If there is anything in particular you would like to discuss, please don’t hesitate to contact our wealth team.

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