Planning for your retirement can be overwhelming + there are many factors to consider in your pre-retirement years.

How do you envisage your retirement?  It’s important to give continued consideration to your superannuation and its overall purpose, your retirement!

Research has found that only 44% of Australian’s over the ago of 40 feel prepared for retirement.[1]  The most common questions we’re asked by our clients include:

  • WHEN SHOULD I RETIRE?
  • HOW MUCH MONEY WILL I NEED FOR RETIREMENT?
  • WILL I BE ELIGIBLE FOR GOVERNMENT ENTITLEMENTS?
  • HOW + WHEN SHOULD I BEGIN TO ACCESS MY SUPERANNUATION?

The important thing to remember is that everyone’s idea of retirement is unique, and living your ideal lifestyle in retirement involves careful planning.

Retirement planning is something that you need to consider while you’re still working and contributing to superannuation.  It’s important to have the right financial strategy in place well before your anticipated retirement date.  This will ensure that you’re maximising your resources and boosting your retirement savings in the most effective way possible in your pre-retirement years.

HERE ARE SOME THINGS TO THINK ABOUT…

How much do you really need in retirement?

You may have read news headlines proclaiming that you’ll need $1 million or more to retire.  There is no magic super number and this figure doesn’t consider your personal circumstances and the amount of money you would need to live on in retirement.  The reality is, most people approaching retirement will not have $1 million in super.  The most recent rate from the Australian Bureau of Statistics shows that at retirement age men have an average balance of $322,000 compared to $180,000 for women. .[2]

Women in particular should be mindful of super.  It’s a well-known fact that most women retire with less in superannuation than men.

To start figuring our how much you might need for your retirement, you may wish to consider:

SUPERANNUATION + CONSOLIDATION

Consolidating multiple funds into one that best suits your needs will save you on the fees and charges associated with each account.  And if you only have one super fund – you’re already ahead of the 40% of Australians who have two or more.  Even though retirement may seem a long way off for some, it’s important to give regular consideration to your superannuation.

Superannuation is one of your most important assets, but is often neglected.  The average individual will have between three and five super funds over their working life.  If these funds are held at the same time, one of the reasons to look at consolidating is to save on the fees and charges associated with each account.

Superannuation funds also include features such as personal insurance.  Over time your responsibilities in life change.  Consolidating superannuation may be a good time to review what insurances you have in place as well as nominating or updating your beneficiaries, which we always strongly recommend seeking advice prior to consolidating to ensure you’re making the best decision.

YOUR HOUSEHOLD BUDGET 

It’s empowering when you work out the dollar figure of how much it costs to run your household.  Figuring out your retirement number starts with a budget.  What amount do you spend on groceries, utilities and other household bills?  How often do you go out to eat, take a holiday or participate in hobbies and other activities that affect your budget?  Will these expenses change overtime and in retirement?

ELIGIBILITY FOR GOVERNMENT ENTITLEMENTS

The Centrelink Aged Pension is a government entitlement that is paid to people who meet the age and residency requirements.  The amount you receive depends on a range of factors such as your assets, how much super you have and any other income you may receive in retirement such as rental returns.

If you’re not eligible for the Centrelink Aged Pension, it’s possible that you may be eligible for other benefits such as the Commonwealth Seniors Health Care Card which can help you with the costs of prescription medication and other health services.

HOW LONG YOU’LL SPEND IN RETIREMENT

As a result of advancements in the availability of public health and medical treatment, Australians are living longer than ever. [3]

When planning for retirement, it’s important to understand how long you may need your retirement savings to last.  Life expectancy calculators make a lot of assumptions to provide you with an estimate of just how many years you may spend in retirement.  This will give you an indication of how long your superannuation will last, as well as the age at which you may consider applying for government entitlements to supplement your retirement income stream.

WHAT KIND OF LIFESTYLE YOU WANT IN RETIREMENT

An important part of retirement planning is deciding on the kind of lifestyle you want to lead when you retire.  For some, retirement may mean international travel every year, while for others it might mean spending more time at home with loved ones.  The type of lifestyle you want in retirement is very relevant to your overall retirement planning as it will play a role in determining how much money you will need to retire.

WHEN CAN I ACCESS MY SUPER?

You can access your super when you reach your preservation age.  Your preservation age depends on when you were born.

DATE OF BIRTH

PRESERVATION

AGE

Before 1 July 1960

55

1 July 1960 – 30 June 1961

56

1 July 1961 – 30 June 1962

57

1 July 1962 – 30 June 1963

58

1 July 1963 – 30 June 1964

59

From 1 July 1964

60

Do you feel like you’re not able to decide when you can retire?  You’re not alone and this is more common than you think, and this can have a significant impact on your financial situation.  Canny Advisory specialise in all aspects of retirement planning and work closely with clients throughout all stages of their lives to help them achieve their financial goals during pre-retirement years and in retirement.

So no matter what stage of life you’re currently in, we can help you to ensure that you have a financial plan in place to achieve your goals and provide you with a comfortable lifestyle in retirement.

[1] Investment Trends October 2016: Industry-wide collaboration necessary to better prepare Australians for aged care costs

[2] This is how much money Australians have in super

[3] Life Tables, States, Territories and Australia, 2016-2018