At Exelsuper, we constantly remind ourselves that everything we do is not about super or investments, but rather about helping you ensure that your retirement is the best years of your life. Full of freedom, happiness, good health and an abundance of wonderful choices. But this takes planning. Retirement is different for everyone. The way you feel and the way you respond to this huge life change depend heavily on the reasons for leaving the workforce and on how you deal with the changes that occur during this transition. Planning your retirement can make for a smooth transition. Make plans for your financial future, but also make plans for your lifestyle, relationship, family, hobbies and part-time or volunteer work.
Some people look forward to retirement as an extended holiday where they can finally slow down and 'smell the roses'. Other people expect to have a busier, more active life than when they were working. A retired chap was once quoted as saying "I’m so busy in retirement that I'm thinking of putting a man on to do my fishing for me". Of course he was joking, but, truly, retirement should be the crowning achievement of a wonderful life, fulfilling exciting and glorious. "Retire Right" is all about making your retirement just that. You should truly believe that your best days are yet to come. This Retirement Handbook is designed to help you wring the last drops of enjoyment and fulfilment from your retirement.
In Adelaide, the life expectancy for women is around 83 years and for men, 77 years. If you leave work at 65, for example, you could expect between 12 and 18 years (at least) of retirement. How are you planning to live those years? It is important to consider the kind of lifestyle you want before you retire and start to make plans, and even implement some of them, before you leave work.
Planning can help create a happy retirement
People who plan an active life after retirement tend to be happier than those who have no plans or routines. Suggestions include:
Here are ten questions you should ask each other when planning your retirement dreams.
Good to talk
When meeting an Exelsuper Advice financial planner for the first time, you will be asked a series of questions to find out what your retirement goals and dreams are. What is surprising is how little the couples, who will be spending this time together, have asked each other the same questions.
US research by Fidelity Investments interviewed 648 married couples born between 1937 and 1964 and their survey showed that 62 per cent of pre–retirees didn’t agree on their respective retirement age and 34 per cent had different expectations about their lifestyle in retirement.
In Australia, research done by Core Data showed that one in three pre–retirees (32.1 per cent) did not believe they would be able to choose their retirement date and will have to work as long as possible. Two–thirds of pre–retirees felt overwhelmed by their super and retirement finances while more than half of post–retirees (58.3 per cent) were not. It shows how a little knowledge can go a long way.
The first step towards taking control of your retirement is to turn to the person next to you and discuss what you’d like to do after your working life wraps up. Not only will it save time (and a few disagreements), but it could be the first step to creating a better future.
10 essential questions
When do you want to retire?
While 22.6 per cent of pre–retirees had already set a date, 45.3 per cent felt they could but hadn’t as yet. With the change in superannuation conditions, you can semi–retire early, but with the global financial crisis many have deferred this. It doesn’t matter if the date moves, as long as you are aware of the financial impacts it has.
Do you want to work in retirement?
More than half of the Australian pre–retirees (52 per cent) plan to keep working part–time after they retire. In the American research, nearly half (47 per cent) couldn’t agree on this. If the considerations are financial, you should both consider who has the greater earning potential, job flexibility and package benefits.
What type of lifestyle do you want in retirement?
Australian pre–retirees believed they would need $52,104 a year in retirement, and 39.1 per cent felt they were unlikely to have enough to maintain their lifestyle in retirement. Some of this can be averted through better planning and understanding what your expectations are and how much you will need to reach them.
Where do you want to live?
Have you thought about the benefits of down–sizing, moving to a quieter place or buying a holiday home? Or perhaps you prefer to stay where you are and take 'at home' breaks? Couples will have to agree on their ideal living and holiday destinations before picking how and where they want to spend their time and what the cost implications are.
Do you know where all your assets and important documents are?
It's important to put together the documents for all the assets you hold, from bank accounts, superannuation statements to life insurance plans and any shares. It’s also essential to get a good hold on your financial picture, as taking control is an important first step to overcome that feeling of being overwhelmed.
How healthy does your retirement look?
The Australian research showed that one in five people were still unsure as to whether they would have enough in retirement. According to the treasury, the average super payout in 2010 was $84,000 so it’s obvious many will not have enough super to retire comfortably on. It’s important to get a realistic picture of how healthy your life after work choices are looking and whether they need another check–up or you need to talk a specialist, such as a financial planner.
How healthy are you?
Even if you've been hanging out for it, retirement can actually be a big physical and mental adjustment after a lifetime of a work and routine. Looking after your health should be a real priority, as health issues can have as big impact on your finances. Review your health insurance to ensure it covers your health needs.
Have you worked out an income plan?
A budget will give you an idea of what you need in retirement. An income plan will give you a clearer picture of where is best to draw if from. A financial planner will be able to help you determine when you should draw from your super, allocated pension or other income sources to help maximize your pension and minimize any tax implications.
Have you worked out your beneficiaries?
It may sound too early to talk about who will inherit your assets, however estate planning is an important way to help you understand where you stand financially. Appointing an executor and beneficiaries means getting the paperwork out of the way early.
Do you know what you will be entitled to from the pension?
Fortunately over three–quarters of Australian respondents were aware of their eligibility for the government funded pension. A financial planner can help maximize your pension entitlement and eligibility for a senior’s health care card, which will save you a great deal of money.