Throughout your working years, your priority has been saving for retirement so you’ll have enough set aside to provide income that will last for the rest of your life.
When you turn age 65, there’s an 80% possibility that you’ll live to age 80 and a 27% chance you’ll reach age 95. So for many people, retirement could last for 20, 30 or more years. This is why you may need a plan that includes income you can’t outlive
As retirement approaches, it’s important to consider what you would like your lifestyle to be and what you have set aside to make that a reality. For example, some people plan to relocate, travel, become more involved in cultural and other activities, or take up a hobby.
Once you have your vision for retirement, you should review your finances including your investments, debt, day-to-day expenses and lifestyle assets.
Then, your priority can shift to creating a retirement income plan that makes sense for you.
To help with your planning, consider these key questions about retirement income:
- How much income do you need?
- When should you start receiving retirement income?
- Where will your income come from in retirement?
- How much should you withdraw and from which assets?
- Will you work part-time to support your income or volunteer?
- How will inflation, over time, affect my lifestyle?
You may need to make some lasting changes to the way you live
- work to a different budget
- downsize your living accommodation
- remove debt
- cut discretionary spending
- downsize from 2 cars to 1
- review all your lifestyle assets eg. investment properties, boats, bikes and expensive hobbies
- geographic relocation either for lifestyle or the family
Seek professional advice from a financial adviser
Consider what would happen to your estate if you pass
- identify your legal personal representative
- update your will
- make sure you have a current power of attorney
- consider using testamentary trusts relative to your grandchildren’s future
What government support will be available
- aged pension
- health and travel concessions
Your children and grandchildren
- understand the benefits of gifting
- setup investments for them
- consider lending or guaranteeing money for investments or property