Planning for retirement

Questions to start your retirement planning

Here are a few questions to get your retirement planning underway. Thinking about these might lead you to more questions, but that’s the fun part of the journey.

• How much money will you need for your retirement plan?
• How long will you likely spend in retirement?
• Where will the money come from?
• Where will you live when you’re retired?

How much money will you need to retire?

The backbone of an effective financial plan is determining your cash flow based on the type of lifestyle you’d like to live, so your first step would be to do an honest budget. 

If you already have a personal or household budget, try updating the information to reflect your predicted spending in retirement. While your work costs will be reduced or even eliminated, you’ll spend more in other areas, for example, investing, medical costs, travel and maybe some ‘adventuring’. If you commit to that plan, the rest of the plan takes care of itself. 

You might also like to look into what your entitlements are with an Age Pension or other government subsidies, as these can be a good supplement to help you during retirement.

Budget Planner

Our budget calculator is a great way to track your spending. With just a few basic habit tweaks, you’ll find that living within your new budget is achievable. It could be as simple as deciding to put your future first, so that every time you get paid, you’ll invest more or use some that money to reduce your debt – and whatever is left over is your spending money.

Using online resources like MoneySmart, opens in new window, you can utilise their range of calculators to help you plan for your retirement goals.

Keep in mind your plan needs to be a long-term one. It’s likely that your spending, and your needs, will be different in the later years of your retirement to what they are at the start. Your plan will need to evolve and be adaptable.

Where will your money come from?

Age Pension

Once you reach the qualifying age, you may become eligible for a fortnightly Age Pension (subject to asset and income tests). You can find out more from the Department of Human Services, opens in new window.

Superannuation

You could start accessing some of your super as soon as you hit your preservation age, opens in new window. You’ll have to withdraw a minimum amount each year from your super pension account, depending on your age. Unless you have met a full condition of release, opens in new window, you may be limited to how much you can withdraw from your pension each year, and whether or not you can access lump sums.

Regardless of whether you have a self-managed super fund or not, speaking to a retirement adviser for your retirement planning might be beneficial.

Investments

Ideally, soon-to-retire Australians have a diverse range of investments besides their super scheme and the family home. You can never do enough research. Have a look at ASIC’s Moneysmart website, opens in new window, where they provide a summary of retirement, social security benefits and super, among other things.

Where will you live in retirement?

Going further into retirement most likely means your lifestyle will change. But it also offers an opportunity to shift lifestyles to one that better suits that stage of your life. Here are a few common housing choices retirees make.

Downsizing your home

While many Australians have wealth tied up in their family home and some down-size to buy a smaller home to release equity in their home, what you do depends on your own personal circumstances. There are many things to consider before you can do this, including tax implications, Centrelink entitlements and eligibility. It’s important to discuss this with a financial adviser to ensure this is the right strategy for you.

Home sharing

It’s a concept that is becoming increasingly popular, particularly for those who may have lost a spouse. Living with a flatmate means sharing the costs of living such as utilities and rent. It can also be a form of income if you own your home.

Over 55’s or retirement living

This can be a great way to retain your independence, while also becoming part of a community style of living.

Aged care

When things really slowed down and you could use a few extra sets of hands to help you with the day-to-day tasks, aged care can help.

Caravans and RVs

Buying a caravan or RVs are another option for senior living. Whether that's becoming a resident in a RV park with small lots and community space or travelling across Australia by caravan.