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For many people, their retirement dreams are about long, leisurely days without a care in the world.
The reality can be a little different, however, particularly if you haven’t thought about some of the more humdrum issues retirement involves, or considered what your partner (if you have one) and family expect once you leave the workforce.
Although retirement income is always an important issue, lots of people find it’s not the biggest obstacle to a happy and successful third phase of their life.
Things like where you live, the type of home you need, how much time you expect to spend with your partner, and even the activities you plan to fill your time with all need careful thought and discussion before you plunge into retirement.
Whether you have 15 years or just a few months before the big day, we’ve pulled together a checklist of issues to consider and discuss with your family to ensure the years ahead are enjoyable.
Still got 10–15 years before you retire?
With this many years before your planned retirement, the focus will probably be more on organising your financial plan so you have the foundations in place to build the retirement nest egg you need.
However, it’s also a good time to start reflecting on what you expect from retirement.
Here’s some issues to consider in these pre-retirement years:
1. Finances
- Begin creating a financial plan to pay for your retirement.
- Set a rough date for leaving the workforce.
- Investigate the annual cost of your preferred retirement lifestyle.
- Consider whether you are likely to be still financially supporting your children (or even your parents).
- Consider speaking to a financial adviser.
2. Lifestyle/activities
- Consider how you would like to spend your time in retirement.
- List some personal goals you want to achieve during your retirement.
- Think about what – if any – travel (both domestic and international) you would like to undertake and how often.
- Review your hobbies and consider how much time you would like to devote to them in retirement.
- Think about any sports (e.g. golf, bushwalking, surfing) you want to pursue in retirement.
- Consider any community activities (e.g. volunteering, charity work) you want to undertake.
- Identify any new skills you could learn as part of your current employment that could be useful in retirement.
3. Personal circumstances and your family
- Consider where you will want to live in retirement (e.g. your current suburb, move closer to the beach or relocate overseas).
- Think about your family circumstances and how they will affect your retirement plans (e.g. second family with young children or elderly parents needing your assistance).
4. Administration
- Check the existing death benefit nomination for your super account remains appropriate for your current personal circumstance.
- Ensure you have a valid Will with the appropriate beneficiaries.
- Select an executor for your estate to ensure your wishes are carried out.
- Organise an enduring power of attorney (EPOA) and advance health directive.
Still got 5–10 years before you retire?
Retirement is still a few years off, but now is the time to get serious about your retirement planning and ensuring your finances are in order.
As well as topping up your super, also consider paying off any debts (including your mortgage) if you can and make decisions about your other investments and financial assets.
Here are some issues to consider:
1. Finances
- Revisit your financial plans for retirement to ensure you are still on track.
- Review what other pre-retirees have done to plan their retirement.
- Add up all your debts (including your mortgage) and think about ways to pay them off so you can retire debt free.
- Consider whether to pay off your mortgage or top up your super.
- Review your planned retirement date and consider whether it’s still right for you given your current circumstances.
- Check when you are eligible to access your super and the tax implications of retiring at different ages.
- Think about how much money you need to fund your planned retirement (both in super and outside investments).
- Calculate your likely retirement savings at your planned retirement date.
- Check ways to reduce any gap between how much you want to live on in retirement and your likely savings at retirement (e.g. save more, spend less, stay at work longer).
- Check if you will be eligible to receive any Age Pension support.
- Investigate other possible government assistance in retirement.
2. Lifestyle/activities
- Try out some new hobbies and activities to see if they could be things you want to do in retirement.
- Join some clubs or activity groups to make new friends and contacts outside work you could socialise with in retirement.
- Consider whether you have any skills (personal or work-related) that could be used to earn extra income in retirement if you need it.
3. Personal circumstances and your family
- Revisit your plans on where you want to live in retirement.
- Research possible locations if you plan to move.
- Talk about retirement with your partner and ensure you both agree on your planned retirement dates and lifestyle.
- Discuss how you both want to spend your time in retirement and how much time you want to spend together.
4. Administration
- Review the existing death benefit nomination for your super account.
- Update your Will if your family circumstances have changed (e.g. a divorce or remarriage).
Still got 1–2 years before you retire?
With your retirement getting close, it’s important to check your financial and personal plans still make sense and will be appropriate when the big day comes.
To ensure you’re fully prepared, here are some things to check:
1. Finances
- Review your financial plan to ensure it’s still appropriate given your current financial circumstances.
- Take careful stock of your current financial situation and create a balance sheet listing all your assets (including super and personal savings) and debts (including any mortgage, personal debts or investment-related loans).
- Check how much Age Pension support you could receive in retirement.
- Work out your likely total annual income in retirement (including income from any investments such shares or investment property).
- Review your planned retirement date. Work out if you can still afford to retire then, or whether you will need to work for a bit longer.
- Develop a draft budget for your spending in retirement (including regular bills, holidays, home maintenance and healthcare costs).
- Check out the ASFA Retirement Standard here for ideas on how much the average retiree spends on items like food, clothing and household goods.
- Consider speaking to a financial adviser if necessary.
2. Lifestyle/activities
- Join several community-based or sporting groups, or start volunteering as a way to make some new friends and social contacts.
- Review your plan for keeping your mind active and engaged in retirement.
- Investigate opportunities for further education (e.g. University of the Third Age, short courses).
3. Employment
- Review whether you have any work goals you still want to achieve.
- Consider whether you intend to retire completely from the workforce or still work a few days a week.
- Talk about your retirement plans with your employer.
- Think about the pros and cons of taking long-service, annual or even extended unpaid leave before retiring permanently.
- Update any skills you could use to earn extra income in retirement if you find you need it.
4. Personal circumstances and your family
- Consider whether your current home is suitable for your intended retirement lifestyle, or if you will need more/less space.
- Review your home carefully to see if it needs any major renovations or maintenance.
- Decide whether to undertake the renovation/maintenance work now while you still have a regular income.
- Assess whether your car needs replacing and consider when the best time is to do it and if you need to upgrade/downsize your vehicle.
- Collect information on any retirement travel you have planned.
Only 12-6 months until you retire?
Retirement is very close now, so it’s time to start putting your plans into action to ensure your retirement is off to the best possible start. Here’s a simple checklist to help you work through all the challenges:
1. Finances
- Review all the details of your financial plan and make sure everything is in place to create a sustainable income in retirement.
- Obtain a retirement estimate from your super fund so you know how much you are likely to have on the big day.
- Search for any lost super and consider rolling it into your existing super account.
- Review the life insurance provided by your super fund and consider whether you will need any cover after you retire.
- Decide what you will do with the savings in your super account (e.g. roll into a super pension, withdraw and invest, buy an annuity).
- Think about investment options for your super pension if you plan to start one.
- Review whether you will need to generate more income from options like a reverse mortgage.
2. Lifestyle/activities
- Discuss your retirement date with your partner and family to check it’s still suitable and everyone agrees.
- Set up a regular exercise program you can continue into retirement.
- Establish a clear budget for retirement spending and ensure your partner agrees.
- Get a thorough health check.
3. Administration
- Update your Will and ensure you review it regularly throughout your retirement.
- Organise an enduring power of attorney (EPOA) and advance health directive if you don’t have them in place.
- Review your health insurance policy to see if your current cover is appropriate for a retiree.
Only 3-6 months until you retire?
The big day is nearly here and you’re about to start an exciting new chapter in your life. To ensure your retirement is a happy and successful one, start putting all your careful planning into action:
- Contact your super fund to find out how you can access your super balance.
- Lodge your application for the Age Pension up to three months in advance so you will start being paid as soon as you retire.
- If you are not eligible for the Age Pension, apply for the Commonwealth Seniors Health Card.
- Check if you are eligible for other government benefits or services.
- Sign up for your state’s seniors card to save on purchases, travel and entertainment costs.
- Investigate any discounts offered by your state government (e.g. gas and electricity rebates, licence concessions).
