One of our favourite maxims here at IAS is: “If you fail to plan, you plan to fail.” Rarely is this truer than when it comes to your retirement. The sooner you put together a plan for how you will live at this life stage the better. A crucial first step is figuring out how much money you will need for a comfortable retirement.

Naturally, this figure will depend upon your lifestyle, assets, retirement plans and expectations. However, you should be able to set a financial goal with a few simple calculations.

Step 1:

Put a retirement budget together – calculate your yearly budget, including any holidays and travel, as well as a buffer for those unexpected expenses.

Step 2:

Consider downsizer contributions you may be able to make toward your superannuation, such as selling the family home.

Step 3:

Make a savings plan that will enable you to achieve your goals. While you are working fulltime you should be ‘saving first, spending second’. The sooner you start the more you can save.

Making sense of your super

There are online calculators that can help you figure out how your super is tracking and how much you’ll need in retirement. There are also many ways to approach a retirement plan. Some people work part-time at retirement age and live off of their savings and a government part-pension. The maximum age pension for a couple at retirement (if you qualify) is currently $622.80 per person per fortnight.

Keep in mind that if your savings vehicle is super you should choose an investment risk profile that you are comfortable with. If you are nervous about the volatility of your investment, then change to an investment option within your super that has lower volatility.

If you want the certainty of a guaranteed retirement income, lifetime annuities can help eliminate risk at retirement by providing you with a fixed income. An annuity (also known as a lifetime or fixed-term pension) is an insurance product that you purchase from a super fund or life insurance company with a lump sum from your super or other savings. When you purchase an annuity, you choose whether you want your set retirement payments to last for the rest of your life, your life expectancy or a fixed number of years.

Downsizing in retirement

It’s also wise to financially and practically prepare for different possible scenarios about care in retirement. This may include having a plan in place for preparing your home for sale and maximising its value, getting in the right people to help with this, and knowing how much it is going to cost you to downsize.

We often see clients who have had to leave their home rather suddenly and have homes that they've lived in for decades. They have accumulated a lot of possessions and need help de-cluttering, deciding what to put on eBay or give to charity. If family members are unavailable to do this these experts can supply help with cleaning, refurbishment, styling, interior design and even renovations. They should be able to offer full transparency of quotes and billings and work directly with a network of suppliers at wholesale rates.

There are people who specialise in helping clients extract maximum value from their homes before they put them on the rental or sale market. They specialise in the older demographic who have had to suddenly leave their family home in order to enter into apartment units, a single story home or perhaps eventually an aged care facility.

Most people put off making these types of decisions because we all feel like it will never happen to us. But it will and knowing that you’ve prepared and protected yourself can provide great peace of mind at what may otherwise be a stressful or vulnerable time.

Talk to us if you’d like help with your retirement plans. Please call anytime on(02) 8268 2900 for an obligation-free chat.