When you first start work, the concept of retirement seems so far away.
Thinking of retirement
As you progress through your working life, you may start to dream of retirement and how you’ll get to spend more time on hobbies and other past times you love. In doing so we often forget to give serious thought to how our retirement will look in reality.
Your retirement can be around one third of a total lifetime, a significant period of time. Rather than just ‘letting retirement happen’ it makes a lot of sense to put solid thought into how you can design a retirement that will be satisfying, rewarding and worthwhile.
Creating your retirement
Before getting into the nitty gritty of budgets, pensions, incomes and investments, it’s vital to consider the activities, relationships and accomplishments that will form your retirement life. While most people may equate retirement as a time of greater ‘freedom’ and ‘relaxation’, do you actually know what this means for you and how you’ll achieve that dream?
Planning for retirement means designing a lifestyle that has tangible goals and activities, giving you a sense of purpose. Here are some questions to get you started:
- What would you like to do more of once you have more time on your hands?
- What other family and friend relationships will you want to spend more time on?
- What are the hobbies and pastimes that you want to really enjoy more?
- Is there a cause, interest or passion you will now have time to pursue as a volunteer?
- Do you want to change the type of home you live in or the location?
- Where would you like to travel to?
Lifestyle should drive the planning process
Once you have a more of an idea about what your ‘retired self’ will be doing and enjoying, you can then start to plan. This will give you an idea of what income you will need to make everyday life and other activities possible.
- What ‘lump sum’ amounts you will need for spending on things like travel or a new car?
- How will pension entitlements come into play?
- What other non-superannuation assets will need to be factored in?
Start now, it’s never too soon
Understanding your retirement income and expense requirements will give you a basis from which you can plan your assets, investments and savings right now. This includes identifying things such as:
- Any shortfalls in superannuation savings.
- How your home and other assets will fit into your retirement income situation.
- What type of investment mix best suits your situation and goals.
- How you can ‘transition’ to retirement by using tax effective methods that allow you to draw down from your super before you retire.
- How you can best manage your debt situation.
Making your plan
Planning for your retirement can be overwhelming and is a personal thing because our situations are all different.
A financial adviser can help you plan holistically for retirement guiding you through the planning process, providing clarity and peace of mind.
Published February 2019
Updated December 2022