The latest Australian census suggests that the average retirement age is 55.4 years. Retirement may seem a long way off if you’re only in your 20s or 30s, but planning ahead is always advantageous. If you’re looking to the future, and you want to start thinking about what happens when you stop working, this guide contains useful information about retirement planning.
Your finances
The most important consideration for most people is their finances. When you have a job, you get used to a steady income and receiving weekly or monthly payments. After you stop work and you retire, you’ll need to think about how you cover bills and expenses and fund your lifestyle. For many, paying into a retirement fund begins long before the age of 55. Most employees contribute to pension schemes and there are other savings initiatives and ideas you can explore to top up the pot.
If you’re currently working, and you want to start building a retirement fund, the first step to take is to find out more about your pension scheme. Read the details provided by your employer and make sure you’re aware of your options. If you’ve been paying the minimum amount, for example, you might want to increase your monthly contribution to boost your fund.
When thinking about your financial situation as a retiree, it’s beneficial to analyse your commitments and draw up a rough budget. What kinds of expenses will you need to cover? Will you still be paying off a mortgage? What is your average monthly spend on utilities? Do you have any outstanding debts that you may be paying off when you retire, such as loans or credit cards? Do you plan to borrow any more money before you retire? How much money will you need to live comfortably or indulge hobbies and interests? A lot can change in a year, let alone a decade or twenty or thirty years, but it’s helpful to have an idea of how much you want to save.
If you’re budgeting for your retirement, try to prioritise paying off debts and reducing interest payments before you save on top of pension contributions. If you’re paying off a loan or a mortgage, for example, keep up with your repayments. If you use credit cards, try to clear them every month and take advantage of 0% offers on balance transfers. Paying off debts before you save will help you to avoid expensive interest charges.
Furthermore, a lawyer can help with your retirement planning. Lawyers can help structure your estate in a way that minimizes the tax burden on your beneficiaries. It involves strategic gifting, the establishment of trusts, or other mechanisms that can significantly reduce estate and inheritance taxes.
Lawyers can advise on strategies to protect your assets from creditors, lawsuits, and other claims, which is important for individuals with substantial assets or those in high-risk professions. For business owners, legal professionals can assist with succession planning, ensuring a smooth ownership and management transition without significant tax penalties or operational disruptions.
Lawyers can also help execute the estate after your death, aiding executors with the complex process of collecting and distributing assets, paying debts, and fulfilling the will’s instructions. Find out here about will and testamentary trust and maximising estate planning.
Where you’re going to live
Our lives often change a lot when we stop working and this can impact the way we spend our time and where we want to live. If you’ve raised a family, or you’ve been living in a large house or a home close to your workplace, you might be thinking about downsizing, relocating to a different area or exploring options such as lifestyle retirement villages or swapping a house for an apartment. Surveys suggest that around 26% of over 55s in Australia choose to downsize. As well as looking at smaller houses or apartments, you might want to think about selling to release equity or moving to be close to family members or embrace a different lifestyle. If you’ve lived in a town or city, for example, you may long to be near the beach or close to open, green spaces.
As you approach retirement age, take an interest in the property market and keep an eye on prices and buying trends. Timing is important when buying and selling houses. To capitalise on movements in the market, it’s best to avoid buying when prices are peaking and selling when prices are plummeting. It’s also wise to use buyer trends to make your home more appealing if you’re preparing to put it on the market.
Work
Retiring means giving up work, but many people struggle to transition from a full-time job to having no work commitments. If you don’t want your work life to grind to a sudden halt, it’s worth exploring options, such as casual work, freelancing, setting up a side hustle or volunteering. These avenues provide scope to keep busy and socialise while giving you control of your schedule and more freedom. There are also opportunities to earn money and increase your retirement fund.
Hobbies and social activities
Being able to devote more time to hobbies and social activities is one of the main attractions of retirement. Many of us don’t have as much time as we’d like to indulge our interests or try new activities due to hectic work schedules and other commitments. As you get older, think about activities or hobbies you’d like to try and interests you’re keen to rediscover. It’s beneficial for mental and physical health to build social connections, spend time outdoors, keep your brain active and embrace exercise.
Take up painting, pottery, music, or writing. Artistic activities are not only enjoyable but also excellent for cognitive health and emotional expression. Volunteering can provide a sense of purpose and community engagement. Look for opportunities in local nonprofits, hospitals, schools, or community gardens. This can help you stay active and connected to others while making a positive impact in your community. If your living situation and health allow, consider adopting a pet. Pets can provide companionship, reduce stress, and encourage more physical activity.
Health and well-being
Getting older makes us more susceptible to illnesses and disease, but there are lots of ways you can lower risks and boost health and well-being during your 50s, 60s, 70s and beyond. Taking positive steps at a younger age is also hugely beneficial for healthy ageing. Try to ensure that you exercise regularly, get enough sleep and eat well. This will provide a solid foundation as you get older, which you can build on during your retirement.
Retiring provides a golden opportunity to focus on mental and physical health and prioritise well-being. Spend as much time as possible doing things or seeing people that make you happy, turn travel plans and dreams into a reality and allow yourself time to unwind and relax. Keep up with health checks, tests and screening, stay active and don’t hesitate to seek expert advice if you have concerns about your health.
When we think about retirement planning, we tend to conjure up images of pension pots and saving schemes, but there’s a lot more to think about. As well as getting your finances in order, it’s beneficial to prioritise your health and well-being and consider where you want to live, what kind of lifestyle you want to enjoy and how you want to spend your time.
