You are ready to retire, and now what?
Steps to prepare for retirement.
I’m sure that in every country you have to put some thought into planning for your retirement.
Well, at least to figure out if you can actually afford to retire.
But Australian system is so much more complicated than in most other countries therefore it is essential for you to properly prepare yourself right from the start
If you ask me why, well, this is what today’s topic is all about. I will explain in this article the reasons why it is essential to start preparing for your retirement as soon as possible and what steps to start with.
So today, we are talking about the reasons why in Australia it is important to organise a plan, to be well prepared for your retirement, and those are the reasons that I was able to think of:
1. Retirement in Australia – Australia is not a cheap country to live in, most certainly, not when you stop working. Your wages are no longer coming, but your bills are, so you need to be sure you can meet all those upcoming expenses for years to come.
2. Costs in retirement – You need to estimate how much your retired life would cost you annually, with the lifestyle you wish to have. If you are not sure, watch this helpful video: How much life is costing you in retirement
3. Life expectancy – Then you have to figure out how long you are expected to live. There are two videos to assist you with this topic: How long will you live in retirement, which is one of my first videos, so please be gentle, and the second How long will you need your income in retirement
4. Age Pension – Is Age Pension even on a horizon for you, if it is, maximise it as much as possible, if not maximise your investments for the income and growth, because you are on your own and dependant on your own sources. But very often, what I see is that people might believe they are not eligible and give up on the idea of Age Pension, but a proper plan from a financial planner specialising in this area, might actually find a way of your eligibility, if not in year one, later on in your retirement journey. I have already created over 40 videos on a topic of Age Pension, so there is lots to learn and to listen to.
5. Your Home – The place where you live is important. In financial planning or investment world, our family home is not regarded as investment. Yes, it holds value, but investment is what provides you with an income. Home is a liability from the investment standpoint, not an investment, however if at some point you are thinking of downsizing, this could change your retirement and a level of your lifestyle. There are parts of Australia that are more expensive that others. So moving to a less expensive area might be a good solution for you. Maybe your are asset rich and income poor, therefore selling your family home might be a solution you are looking for. I have created few videos on this topic such as: What to do before downsizing your home or Downsizer contributions to super for better retirement or Downsizer contributions updated, Good Bad and Smart. Watch to figure out if this is the strategy for you.
6. Mortgage – if you still have a mortgage outstanding, but you feel you would like to retire soon, then you really need a proper advice to calculate the best way to deal with your financial liabilities. I have already created videos on this topic as well: Should I pay extra to my mortgage or contribute to super or Should I withdraw from super to pay off my homeloan. This can introduce a real dilemma, but the proper financial calculator that incorporates all your other expenses and plans, will give you an answer, so speak with the financial planner, meaning organise a meeting with me and together we will find the best path for you to proceed forward.
6. Inflation – how should you protect yourself against inflation. Inflation is part of economic cycle, but it is tough on retirees. In retirement most people try to be more conservative and look at investments more from the asset conservation and protection, rather than growth and inflation proof investments. You should really get a very good advice as to how set up your savings to have both, some degree of asset and income security, while not forgoing ability to grow your assets value to inflation proof the value of your estate.
8. Ways to set up your income stream – when preparing advice for clients, the path to retirement is as personalised and as different for each client as your fingerprints are. There is no such thing as one size fits all. And you really need to find your optimum scenario, if not, you might miss out on benefits of level of income that otherwise you could be entitled to. And that can make a difference to the level of income received, or the government benefits you could be eligible for. So ask questions, get your plan ready and set up your retirement to benefit the most.
I am sure there are other reasons, but I thought I would mention the main ones you really should pay attention to.
By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement
