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.
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.
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:
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.
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 your broker who may be able to assist you in securing additional finances to help you make the most of your retirement.