Retirement can sneak up on you, so it is important that you start planning for it as early as possible. We know, for some people, retirement seems like a lifetime away, but trust us, you will be grateful you spent the time preparing when you get to enjoy your perfect retirement. The ideal retirement looks different for everyone, but there are five ways that anyone can start planning, including checking when they can access their super and budgeting for their retirement. To help you start your retirement, we have detailed five things you can do below.
1.Check when you can access your super
First, and most importantly, you need to know when you can access your super. Your superannuation fund is vital to your retirement, giving you money that you can live off without needing to worry. Typically, you can access your super when you turn 60 and retire. How retirement is defined depends slightly on your age and when you stopped working. Typically, you can access your super fund if you are:
- Between 60 and 6,4 and have stopped working permanently or stopped working for any employer after turning 60
- If you are 65 and older, you can access the super fund regardless of whether you are working or not
2.Budget how much you will need for your retirement
When planning for your retirement, you also need to consider how much money you will need to enjoy your retirement. How much money you need and what you currently have in your super or other pension pots will determine when you can retire, so it is important that you think about your budget carefully.
Consider the type of life you want to enjoy once you retire and how much you will need to sustain this lifestyle. You also need to consider if you are single or in a relationship, as this will impact your available funds and how much you can save. The Association of Superannuation Funds of Australia recommends the following lump sums:
- For a comfortable lifestyle:
- $51,805 a year for a single person
- $73,077 for a couple
- For a modest lifestyle:
- $32,897 a year for a single person
- $47,470 a year for a couple
You can use this as a guideline for your budgeting, or you can speak to a financial planner who can help create a budget tailored to your specific needs and lifestyle. This will give you a goal to work towards and allow you to adjust any pension and super contributions to help you reach your goal and retire with enough money to live comfortably.
3.Consider your retirement income options
When you are retired, you have several sources of potential income that you can use to live off. It is worth considering these to see which ones are right for you. For many people, a mixture of the following options allows them to live a comfortable life once they have retired:
Super
Your super can continue to work for you after reaching your preservation age. We recommend checking your balance in your super account and speaking to a financial planner to see how you can get the most out of your super.
Government age pension
Most Australians receive a part or full Government Age Pension, paid fortnightly. This can provide you with additional income if you are eligible, topping up your current retirement fund. You need to meet the age and residency requirements to qualify and will need to pass an income and asset test. After passing, your government pension can supplement any super payments.
Account-based pension
Account based pensions allow you to draw regular amounts from your super while it remains invested. This extra money can be accessed to help cover medical bills, house renovations, or anything else you need to pay for. It allows you to budget better too, as you have regular amounts entering your account.
Assets
Assets, including property, shares, and personal savings can make up part of your income after you retire. It is important to consider your assets and the role they will play in your retirement. You might want to downsize, using the money generated from a house sale to contribute to your retirement fund, or you might consider investing in stocks and shares before retiring to have an income you can rely on.
Continuing to work
For some, an option is to continue working. You could work part-time, or on a casual basis, allowing you to top up your super and other pensions when needed. You can also consider a transition to a retirement income account that allows you to top up your take-home pay, allowing you to reduce your hours and save more.
4.Check your insurance cover
Most super funds come with automatic insurance, but you should check to ensure it is the right insurance cover for you. Your insurance needs can change with age, too, so you will want to review your insurance coverage regularly. You might want to consider the following types of insurance:
- Income protection
- Total and permanent disablement cover
- Death cover (life insurance)
5.Enlist the help of a financial planner
Finally, we recommend asking for help when needed and enlisting the help of a financial planner. Financial planners are experts at creating tailored plans that can help you prepare for your retirement. They will consider your current situation, goals, and how much you can realistically save to help you create the perfect retirement fund. They will also help you explore asset options and review your plan, making any adjustments where needed.
Find your financial planner today
When planning for your retirement, a financial planner makes the entire process easier. Financial planners, like those at Solace Financial, are experienced in planning for retirement and can help you get the most out of your retirement fund. Contact them today for help with financial planning for your retirement.
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