Are you a pre-retiree and are you stressing about retirement?

Written on the 19 October 2021 by Parkside InvestorPlus

Are you a pre-retiree and starting to feel uneasy about impending retirement?

Then read on.

First, what is a pre-retiree?

A pre-retiree is anyone who is in the period where they have decided they are ready to retire to the actual retirement date.

Who is a pre-retiree?

While there may not be a strict definition of what age or age group defines a pre-retiree, generally this cohort is any group who have started to think about retiring before any defined retirement age.

As an example, this could be someone 50 or over and still in full-time work who may start to think about retirement at the age of 65.

In a recent Fidelity survey of 1500 older Australians with just over 500 of the sample making up the pre-retiree cohort, this pre-retiree group were found to be the least happy when thinking about retirement compared to the group who were either semi or fully retired.

Why are pre-retirees stressing about their retirement?

To put it plainly, pre-retirees are suffering from a lack of financial confidence in their retirement planning.

Adding to their stress includes:

·       Will I have enough to retire in a reasonable/comfortable lifestyle

·       Will I have enough to ‘do the things I’ve been wanting to do’

·       Will I be able to take care of my health as I age

·       Will I be able to leave something behind for my children/grandchildren

These are big thoughts and very legitimate and very real, especially given that life expectancy today can span well into your late 80’s and even 90’s.

The same Fidelity survey mentioned above found that pre-retirees with financial advisers were happier and more confident than those without because they felt more in control of their finances.

It’s never too late to see professional help

It’s been said that the best time to plant a tree was 20 years ago, the next best time is now.

If as a pre-retiree you have never sought professional financial advice, then now the right time.

Your financial planner will provide you with various retirement scenarios that allow you to start planning for that period of life.

Here are some ways your financial planner can help you to craft your life in retirement.

How to plan retirement as a pre-retiree

The first step in pre-retirement planning is to do a “dry run” of living on your anticipated retirement income before you retire.

In this case, you attempt to live on only what income you would get from your superannuation and any investments. If you discover you are coming up short, then you may want to put off retiring for a little longer.

The longer you can delay drawing on superannuation and investments, the better – your super balance will have a chance to continue building.

Then, work with your financial advisor on the following components of pre-retirement.

• What do you want to do after retiring? You might want to pursue another job in a different career field that you enjoy. You should also think about how you want to spend all your free time, from personal hobbies to traveling.
• Do you have a mortgage? If so, it’s best (if you can) to pay it off before retirement or at least refinance at a lower rate.
• Do you have enough money set aside? Most people tend to live between twenty and thirty years after retiring. Initially, you may have enough retirement income to survive, but you also need to consider inflation and the effects it will have on your future ability to meet your financial obligations.
• Where do you want to live? Many people want to remain in their current homes after they retire. However, as we age, our housing needs can and do change. Selling your home and downsizing into a smaller home not only reduces your housing costs but also could give you extra money to set aside and supplement your other retirement income.

As you can see, the earlier you start planning your retirement, the better the outcome and your life in retirement.

A financial planner will provide you with independent advice and guidance in line with your retirement goals.

Parkside InvestorPlus can help you with all your pre-retirement and retirement planning needs.  Contact us for a no obligation consultation.