Retirement is no longer a linear process.
For our parents and grandparents, you worked until you retired. There was a distinct before and after in your working life and that was about it. No planning required.
However, superannuation, more people working past retirement age, complicated requirements for Age Pension eligibility, shifting government income support and rules, and the simple fact that people are living longer all complicate what was once a simple life step.
Which makes planning for your retirement, tweaking your expectations during retirement and preparing for your long-term life expectancies all the more important.
But at what stages should you draw up your plans, and how should they change over the years?
Here’s our guide.
10 years before retirement
Start planning now.
While a decade before you retire seems like a long lead in, according to the YourLifeChoices’ 2022 Older Australians Insights Survey, almost 60 per cent of respondents did not believe they had enough savings to provide an adequate income stream for their retirement.
Write down your expectations in retirement such as travel, downsizing and standard of living. A budget of how much you expect this to cost and an annual income expectation is an excellent foundation for all other calculations.
Assess your superannuation and investigate strategies to give it that last little bump before you retire such as voluntary contributions, salary sacrifice, consolidating accounts, spouse contributions or the downsizer contribution.
Shop around for a better interest rate. A few points here and there aren’t going to help in the short term, but over a decade, it could add up to thousands.
As one of your most significant expenses, consider ways to reduce your mortgage if you have one. Insights Survey respondents marked their mortgage as one of their biggest drains on their savings.
If this all sounds like a lot of hard work, that’s because it is. If you are feeling overwhelmed by the scale of change, it’s a good idea to consult a financial adviser, your super fund or even just visit the government website MoneySmart to get the ball rolling.
First few years
Boy is this a change, even if you have been working part time. For some it’s a liberation, for others it’s a time of anxiety, social isolation and loss of purpose.
You will also find your spending habits have changed. There will no longer be the need to maintain a working wardrobe or other costs associated with employment such as commuting or maintaining a work vehicle, but health costs may escalate.
It may be time to readjust your budget as your income changes and set different financial goals, whether that be an overseas holiday or paying off your mortgage.
But it seems Australians are happy giving up the daily grind. The Insights Survey found 85.6 per cent of respondents were confident in their retirement
The next 10 years
You should be hitting your retirement straps about now.
In these golden years, earlier retirement plans put in place should finally be paying dividends, but that doesn’t mean you should rest on your laurels.
Subtle tweaking here and there can provide some added confidence, and budgets should be adjusted to reflect reality.
You may want to stay in your own home, but without savings to draw on maintenance may become difficult financially as well as physically.
Although Australians are not keen on the idea of downsizing. According to the Insights Survey, only 20 per cent of respondents planned to move into a smaller home.
It’s also a good idea to get your affairs in order.
Sort out your will, power of attorney, any deeds and banking details and advanced care directives. It’s also vital to tell people where these things are. You don’t want to add to the stress of your loved ones by forcing them to go hunting around for documents to wind up your estate.
15 years after retirement
No-one wants to face it, but legacy, aged care, and end-of-life planning are vital at this age.
But you are not alone if you have been putting it off. The Insights Survey found 69 per cent of respondents had no plans for their aged care, but about half of those did plan to start considering it.
Things to consider as you age include if your living arrangements suit your physical ability. For example, will you need infrastructure aids such as ramps and grips, if you want to stay in your own home?
The site of your home may even be an issue. You may be sentimentally attached to your bush block an hour out of town, but as far as accessing health and lifestyle amenities, this could become a millstone around your neck if you are no longer confident to drive.
If you think you are going to need aged care, it’s a good idea to shop around now for options in your area to see where you might be comfortable and ease the burden on your family and loved ones.
It’s also important to finalise your will as 71 .3 per cent of respondents to the Insights Survey aimed to leave an inheritance, although 72.5 per cent also said this decision prevented them from tapping into their savings or home equity.
Have you done any retirement planning? Did it make you feel more confident? Why not share your experience in the comments section below?
Also read: How not to die with retirement regret
