Set yourself up for the retirement you want
As retirement gets closer, it’s important to start planning so you’re financially and emotionally prepared. Planning early could be the best way to ensure you’re working towards the retirement you want.
To make sure you’re on track, it often helps to set retirement goals and formulate a plan. As you think about what your retirement goals are, you may also want to consider these important five questions:
1. When do you want to retire?
2. How will you generate the money you need for your retirement?
3. How much super do you have and how much do you need?
4. Will your money run out?
5. Will you be able to live on the Age Pension?
“Deciding when to retire is a big decision which can involve many factors…”
When do you want to retire?
The age you plan to retire can have a significant impact on how you live out your retirement. Essentially, you want to have the right amount of money to enjoy the retirement lifestyle you want. Pushing out your retirement by a few years could boost your retirement savings, but there are other ways to grow your super without working longer than you want to. Deciding when to retire is a big decision which can involve many factors such as:
• The age you can access your super
• How much super you have and whether you have enough
• Where you want to live and if you own your home
• Your health and potential medical expenses
• Your readiness to stop working
• How long you’ll need to live off your super
• Will you still have debts and if so, how much debt you have
• Whether you still have dependants
• If you have a partner, what their plans for retirement are.
How will you generate the money you need for your retirement?
Currently, employers are required to contribute 9.5% of their employee’s gross income into super. But depending on your retirement goals and current age, these super guarantee (SG) contributions may not be enough to fund your lifestyle in retirement. By making an appointment with one of our financial planners, we can enter your details into our retirement simulator to show you how you’re tracking towards your retirement goals and whether your super contributions will fund the retirement you want.
HOW MUCH SUPER DO YOU HAVE AND HOW MUCH DO YOU NEED?
Working out how much super you have is much simpler if it’s in one fund. If you have multiple super funds, you should explore the options of consolidating them into one. How much super you’ll need, largely depends on the type of retirement lifestyle you want. It’s estimated for a comfortable retirement you will need total savings of $545,000 for a single or $640,000 for a couple (as at 2018, calculated in today’s dollars and assuming you draw down all available capital and receive a part age pension).
Will your money run out?
If you’re close to retirement and worried about not having enough super, you may want to consider these options:
• Delay your retirement – it could give you more time to add to your super. Retiring after 60 will mean you can withdraw your super tax-free and could increase your super balance without compromising your income.
• Review your investment strategy – your investment strategy should reflect the time you have until retirement. Now is the time to reflect on your investment portfolio and what type of investor you are.
• Live on less – adjust your budget and consider cutting back. Compare your budget to what’s considered to be a modest and comfortable lifestyle in retirement.
• Find alternative ways to fund your retirement – downsize your home and invest the money left over or sell other assets.
Will you be able to live on the Age Pension?
In most cases, the Age Pension may not be enough to fund a comfortable retirement on its own, but it can still play an important role by qualifying you for the pensioner concession card, so you can save money on prescriptions, utility bills, council rates and other expenses.
For more help with retirement planning, please contact our team who can help you set out your goals and put together a plan to help you achieve your ideal retirement.