Planning for retirement
You’ve got a clear vision of how you want your life to be in retirement. Question is, how do you make it a reality?
Step 1. Set some goals
First up, realise that just because you’re about to stop working, the need for an income doesn’t suddenly stop too. No matter what your goals are, you’ll need some money to achieve them. Don’t forget you’ve still got to pay the bills, too.
Some goals to consider include:
- At what age do I want to retire?
- Where do I want to live?
- Do I want to do anything special when I retire (eg take a holiday, buy a car or caravan)
- How much will I need to live on each week?
If you are in a relationship, work out your goals as a couple. Eligibility for the age pension considers both people in a relationship.
Step 2. Consider your income stream
It’s unlikely that the current age pension will be enough to cover your bills and fund the lifestyle you want.
The key to having a regular income in retirement is to use your savings (whether from super or other investments) wisely, in a way that allows you to maximise any government benefits you may be entitled to.
It is recommended you speak to a financial planner before you make any decisions. This is important because the decisions you make are likely to affect the amount of tax you pay and even your entitlements to pension benefits from Centrelink.
Step 3. Work out how much longer you’ll live
Easier said than done, of course. But the following table should give you an idea.
Your current age |
Males (years) |
Females (years) |
| 25 |
+54 |
+59 |
| 30 |
+50 |
+54 |
| 35 |
+45 |
+49 |
| 40 |
+44 |
+44 |
| 45 |
+36 |
+40 |
| 50 |
+31 |
+35 |
| 55 |
+26 |
+30 |
| 60 |
+22 |
+26 |
| 65 |
+18 |
+21 |
Based on 2003 - 2005 Life Expectancy tables - ABS Feb 2007
Step 4. Work out how much you’ll need
After you’ve worked out how many years you’ve got ahead of you, the next thing to consider is how much money you’ll need to fund this retirement.
This is a common question, and warrants its own section.
Step 5. Seek professional help
Retirement goal setting and planning can mean the difference between really enjoying life in retirement or just getting by.
Retirement planning is vital. You need to consider tax and social security issues and use the funds you have accumulated effectively to maximise your retirement income.
A financial planner will help you plan for retirement and realise your dreams. They will help you:
- learn how to maximise your super benefit
- minimise tax when you withdraw from super
- determine the products that will best suit your retirement needs
- maximise your Centrelink entitlements
- identify investments most suitable to your individual circumstances.