Your Planning Guide for Retirement

Written on the 10 November 2021 by Parkside InvestorPlus

Your retirement is a new phase in your life and in every way, this should be the happiest and most fulfilling time of your life phase.

Just think of all those things you can now do in retirement, that you were not able to do so before because you were time poor and/or because you didn’t have spare cash thanks to your obligations during your working life.

However, this phase of your life does come with one big catch – that is, we are now living longer.

To be specific, a 65 year old male now is now expected to live to an average age of 84.9 years and females can expect to live on average to age 87.6 – that’s another 20 years or so!

What does this mean?

It means we are living longer in retirement and therefore, will need more funds to support ourselves post-work.

What is the implication of a longer retirement phase in life?

Putting it very simply, it means we now need to carefully plan for our retirement, as early as we can, before we retire – if you want to have a fruitful, joyous, and stress-free retirement.

The reality is that many of us have not planned for retirement, we just sort of end up in retirement and then wonder what happened and what am I going to do now.

In fact, research by Adviser Voice highlighted that only 46% of Australians, over the age of 40, feel prepared for their retirement.

That means over 50% of Australians have concerns about their retirement.

Enough of the gloom and doom.

What can you do to start planning for your retirement?

First, you can never start too early to plan for your retirement – remember the saying, the best time to plant a tree was 20 years ago, the next best time is NOW.

And many of us forget there are times when we cannot always choose when we retire – circumstances beyond our control could force this life changing event even sooner, for example; accidents, ill-health, redundancy and any other forces that could trigger an earlier than expected exit.

Fully understand your finances and financial goals

The first step in planning for your retirement is to have a clear understanding of your debt situation, income, assets and ongoing expenses.

How much income you need to retire on depends on your lifestyle aspirations.

The Association of Superannuation Funds of Australia estimate that ‘modest’ lifestyle in retirement would require an annual income of $28,220 (for singles) and around $40,719 (for couples).

Whilst a more ‘comfortable’ retirement would require an annual income of $44,183 (for singles) and $62,435 (for couples).

Start saving for your retirement

Simply relying on your employer’s super guarantee of 10% may not be enough.

Salary sacrificing your pre-tax income into your super fund offers substantial tax benefits, with amounts taxed at 15 percent – far lower than the tax on employment income.

Obviously, it’s best if you can enter your retirement phase as debt free as possible.

Pay down high-interest debt.

Save tax refunds and bonuses.

Ensure you have adequate health insurance – recent research estimates that an Australian couple will face yearly healthcare costs of between $4,975 and $9,900 in retirement.

Retirement trial run

Even if you're in the group that's looking forward to their retirement, you could find that it's not all that it's cracked up to be when you do get there - the reality has not met the expectations.

Just as you might take a car for a test drive before deciding on buying it, why not take your retirement out for a test drive?

Finally, if you haven’t already, make sure you’ve engaged a reputable, trustworthy and experienced financial planner. 

Your financial planner is your financial coach – they will make sure you stay on track with your financial goals and that you are financially, mentally, and emotionally ready for retirement.

Parkside InvestorPlus has guided clients into, and in, their retirement with the minimum of financial and emotional stress by putting in place practical and financially sound strategies.