Retirement Planning

Retirement can be overwhelming so planning before you retire will make the transition a lot easier. The earlier you start planning for retirement and seek professional advice the better the outcome. It is important to plan for the long term and not just the early years of retirement.

Most people would like to have enough money to live on and maintain the standard of living they have become accustomed to. Therefore one of the first things you will need to consider when planning for your retirement is the level of income you will require to meet your needs in retirement. You will also need to consider your capital expenditure requirements (e.g. car upgrades and home renovations). Once you have determined your income needs and capital expenditure requirements, you can then work out with your financial adviser how much capital you will need to meet your objectives.

Below are some important considerations when preparing for retirement:

How much money will I need in retirement?

This will depend greatly on your lifestyle aspirations, expenditure requirements, length of your retirement and investment returns.  As an example, to provide an income of $40,000 per annum, you'll potentially need to accumulate a retirement lump sum of around $603,000 for a period of 25 years assuming a return of 7.5% per annum after fees and inflation of 2.5% (note: age pension entitlements have been ignored). Is this enough?

Budget requirements for a modest lifestyle for those aged 65-84 would be:

  • $46,994.28 per annum for couples*
  • $32,665.66 per annum for singles*

Budgets requirements for a comfortable lifestyle for those aged 65-84 would be:

  • $72,148.19 per annum for couples*
  • $51,278.30 per annum for singles*

*ASFA Retirement Cost of Living December quarter 2023

How can a transition to retirement strategy help?

Under the current transition to retirement rules if you are over the age of 56 you can access your superannuation by starting a super pension, without retiring. You are therefore able to supplement your income with an income stream whilst reducing your working hours and maintaining your standard of living.

A transition to retirement pension can also help in paying down debt before you retire by generating additional net income.

Finally, a transition to retirement strategy incorporating salary sacrifice can help to maximise your retirement benefits. 

How can I maximise my retirement income?

Many retirees have a number of different sources of income including super, investments outside of super (cash, term deposits, shares and property), social security (age pension), casual employment, and downsizing the family home.

It is important to arrange your available finances (government age pension, cash at bank, superannuation and other available assets or income) so that you maximise your retirement income stream in an appropriate way for you. A financial adviser can help to explain different strategies, the level of risk involved and the potential returns you can expect from your investments.

What type of Government support can I get in retirement?

Don't underestimate the value of Centrelink benefits such as the age pension. There are also fringe benefits available (e.g. reduction in rates, energy and phone bills, pharmaceuticals).

The amount of age pension you may be entitled to depend on your income and assets and the way in which they are assessed. Generally, the more assets and income you have the lower your entitlement. Be aware though that you can structure your assets in a way that can increase your entitlement to government support. Any increase you can obtain in the age pension means less of a reliance on your investments.

Even if you don't qualify for the age pension, you may still be able to get a concession card.

Should I stay in the same home or downsize?

If your children have left the family home, it might be wise to consider downsizing your home and utilising some of your capital. These funds may be used to top up your cash reserves, provide for any capital expenditure requirements or provide an additional income stream to ensure the longevity of your retirement income.

What changes can impact on your retirement plans?

There are many factors that can impact on your retirement plans including but not limited to:

  • legislative changes (e.g. government benefits, superannuation and tax);
  • market performance; and
  • your health situation.

It is important to maintain a cash reserve to cover emergencies and unexpected expenses. Also, there is a need to regularly review your situation and strategy in light of any changes.

The above is general advice only - for specific advice relating to your personal situation, please contact us to arrange a meeting.

See how we could help put your retirement strategy in place today. Call us today on 07 3172 4748.

Boutique financial consulting, advisory firm


SP Financial Advice Pty Ltd as trustee for The S&NP Investment Trust ABN 60 597 526 905 trading as SP Financial Advice is a Corporate Authorised Representative (No. 462691) of Matrix Planning Solutions Limited ABN 45 087 470 200 AFS Licence No. 238256.

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