In the face of change, planning can be a liberating force that provides support by strategically guiding you toward an outcome. In Australia, retirement and superannuation go hand-in-hand. Australians have been accumulating superannuation for decades, and for many younger proponents, this is the beginning of their retirement plan. Though it should be known, a practical retirement plan entails much more than a superannuation account or two and this article will take you through several important retirement planning considerations that go above and beyond accumulating superannuation.
What does a retirement plan look like?
A retirement plan pairs a financial strategy with your personal objectives and should leave no stone unturned, from income and investments to succession and estate planning. We often work our whole lives with the dream of a comfortable retirement, and a thought-through strategic plan is a crucial stage in helping realise this.
A properly planned out retirement plan should help you answer how much money do I need to retire?
This article outlines two aspects that intertwine within a retirement plan, I have categorised these as Personal and Financial.
The 20 Factors of
Retirement Planning Guide
Ready to plan, or need more info? Learn about 20 key factors of retirement planning to answer your questions and get yourself on track.
The below synopsis should be used as a starting point, your individual circumstances deserve further inquiry and personal attention.
Your Retirement Plan: Personal Questions You Need To Consider
Is semi-retirement a good option for you?
Think of this as an appetiser, you have the ability to begin the retirement journey by dipping your feet and starting a new work-life balance. This option may ease the pressure, both mentally and financially, and could even be an opportunity to begin a hand-over process of your current role to a successor or junior. There may also be the option available where you can access superannuation to top up your reduced income, and with appropriate financial planning and discipline, the strategy can have further advantages.
How are you going to spend your time?
Employment can fill in most of your time so it’s important to consider how you will spend your time in retirement. Often, being employed and having work colleagues leads to social activity so retirement may mean that you’re not on the Friday night drinks list anymore. While this may not bother you, a healthy social life is good for the mind so you might need to consider a replacement. Often retirees can spend more time with their grandchildren, volunteer in the community, begin a mentoring arrangement, or even take on new personal hobbies. Filling time with mind-nurturing activity can make all the difference.
Consider the impact of your retirement on your family
Your retirement will have an impact on those around you. Initially, you’re more likely to spend a greater time in the home which may interrupt the current dynamic. Once the novelty wears off, retirement can trigger stress and anxiety and if this concerns you, you might like to plan ahead. The right plan can help you to retain your sense of meaning and identity that comes naturally in your working years.
Where should you retire?
Take the quiz to find out
The first step in retirement planning is knowing where you'll live. Will it be beach, country, or city? Take the short quiz to find out where in Australia suits your plans.
Your Retirement Plan: Financial Questions You Need To Consider
How will you fund your retirement?
Having superannuation is one thing but how will this work to fund retirement? You’re likely used to paying tax while working, but what does your tax liability look like when you retire? Throughout our working lives, we build our wealth and stack one thing on top of another. Throughout retirement, you need to start pulling pieces from your stack. A proper retirement financial plan can help by gradually shifting the chess pieces in an efficient and effective manner, so you play the game in an advantageous position.
Can I afford to stop earning money?
A starting point might be to consider what kind of lifestyle you would like to live. Some questions to explore might be: would you like to continue your current salary level throughout retirement? Are you looking to spend more earlier on travel, or complete that renovation that you’ve been putting off? What are the likely expenses in the foreseeable future (new car, home maintenance etc.). How will any remain debt be extinguished?
Akin to how long is a piece of string, this multifaceted question requires individual investigation and should be considered early on, and with a high level of priority.
How long will it last me?
A financial projection can provide you with comfort and an understanding of what you are sitting on. Though importantly, a projection is only as good as its assumptions. While a long-term projection might land you at a particular point in time, the reality is that life throws curve balls and expenses often vary. It’s important to regularly review your projected glide path so you can continue to make decisions with confidence.
Conclusion
Creating and implementing a retirement plan is not a one-off task. As you move through the journey, your goals and objectives move along with you. As Financial Advisers, we stand beside you to create and implement a retirement plan made specifically for you and your family.
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