I’m … living in retirement 

Australians are living longer and retiring earlier with many people now spending more than a third of their lives in retirement thanks to advances in modern medicines and procedures. The biggest concerns that many retirees face are:

  • How far will my retirement savings stretch; and
  • How can I make sure my funds last as long as I do?

Whilst acting on these concerns are best to be done as early as possible, it is never too late to begin.

In order to have a successful retirement, there are a few matters you will need to address including:

  • Looking closely at your finances
  • Making a long-term financial plan; and
  • Growing your retirement income.

 

Where to start?

Once you have made a decision to leave the workforce you are going to need to work out how much money you have now, how much you might have in the future and where is it all coming from.

 

Your starting point:

  • Work out what assets (house, savings, investments) you own and how much are they worth?
  • How much super have you built up and can you access these funds now?
  • Are you eligible for the aged pension and when can you access it?

 

Putting together a plan:

Your next step is to work out what your lifestyle in retirement looks like? How much do you need to actually live on? Are there any discretionary expenses you would like to include like travel or renovations to the home? Are you planning to downsize at some stage? Will you be providing some sort of financial support to your children or grandchildren eg deposit for a home or paying for education?

It’s important to start drawing up a roadmap not just for the next 5 years but a long-term plan because remember, you are now retired and won’t be able to add to these funds if you are no longer working.

 

Keeping your plan on track:

Longevity risk is possibly the biggest risk that retirees face. This is the risk that you outlive your retirement funds. It’s critical to review your plans regularly to ensure that you are still on track and communication is key. Should your plans change you will need to make changes to your investments to ensure that you don’t run out of money and to maximise your retirement savings.

 

Some strategies may include:

  • Put together a pool of assets that minimise your tax, reduce investment risk and provide steady returns
  • Not putting all your eggs in the one basket and diversifying your investments into cash & fixed income, shares and property. This will help reduce the impact of inflation risk and minimise the impact of any future financial downturn
  • Keep track of your spending and stick to a budget to avoid overdrawing on your retirement funds
  • Maximise social security benefits including the Age Pension and Commonwealth Seniors Health Card
  • Spend less and invest in growth assets

The building blocks at this stage in life include:

  • Putting together a plan
    • When will you retire?
    • What are your retirement goals?
    • What are your income requirements?
    • How do you plan on funding your retirement?
  • Superannuation and pension – how to maximise your retirement savings and provide an income for your retirement
  • Super vs non-super investments
  • Reviewing your risk profile and asset allocation
  • Are you eligible for any Centrelink benefits?
  • Do you need to review your will and make provisions for future generations?
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