Retirement planning is an important life preparation but often overlooked. According to statistics, almost half of the Australians retiring in the next four years will not live a comfortable life due to lack of a retirement plan.
A retirement plan ensures that an individual’s cash flow remains intact for a lifetime. Research reveals that retirement can represent up to a quarter of your life, thus the need to have a plan.
As you approach retirement, here are some key retirement planning questions you need to ask yourself.
At What Age Will I Retire?
Age should not determine your retirement time. Instead, you should retire when you are ready to.
In Australia, there is no set age for retirement. Factors such as financial situation, health, and other personal preferences dictate when to retire.
How Long Might I Live?
Life expectancy is believed to be underestimated. However, you can customise your life expectancy by determining the average life expectancy of your age group.
To What Lifestyle do I Hope to Retire?
A retirement plan is not a survival plan. Rather, it should be able to give you the freedom to do whatever you enjoy doing when not working.
What sort of life do you envision yourself living? Is it taking trips around the world? Make your retirement plans depending on what you picture yourself doing when you will be no longer working.
When Will I Access my Super?
You can access your super as soon as you hit the preservation age which is usually 55-60 years old.
After the age of 60, accessing super is tax-free. However, you will have limited options on what to do with the super.
You can access part of your super while still working. This can be done through the transition to retirement pension. Alternatively, you can wait until retirement and take your super as a lump sum.
What Will my Basic Expenses Cost?
It is important to know that costs can be changed to have a good life in the future. For example, you can cut on monthly renting expenses by purchasing a house.
Will I be Eligible for Entitlements?
Know what payments to which you are entitled. Government benefits such as Disability Support Pension and Age pension will boost your retirement income significantly in case you are eligible.
How Much Additional Capital Will I Need to Meet my Needs?
Research shows that individuals looking to retire at the age of 65 years and above need a budget of between $42,764 and $60,264 every year to live a comfortable life.
Individuals looking to have a modest living after their retirement will require a budget of $27,368 yearly.
However, the additional capital required will depend upon the sort of life you want to live.
Have in mind the lifestyle you want. Then, add extra incomes such as government entitlements and savings to sustain it.
What is my Investment Plan to Achieve that Goal?
From mutual funds to properties, any investment for retirement could work for you. However, a financial advisor will help you settle for the best investment plan depending upon your interests and expectations.