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Home / Plan your retirement / Preparing for retirement / Retiring soon? Here are 5 questions you need to answer first

Retiring soon? Here are 5 questions you need to answer first

July 15, 2019 by Barbara Drury Leave a Comment

Reading time: 4 minutes

On this page

  • 1. Am I eligible to retire?
  • 2. How much money will I have?
  • 3. What should my retirement budget be?
  • 4. Where do I want to live?
  • 5. Will I be debt-free by the time I retire?

The start of living your best life is in sight – but are you ready?

Retiring is a huge step and it would be normal if you have some last-minute details to sort through before you make the final leap.

In the run up to retirement, it’s important to prepare yourself financially and emotionally for what should be an exciting time of life. To help, here are five simple questions to answer, that will pave the way.

1. Am I eligible to retire?

There’s no set retirement age in Australia but there are some practical hurdles to clear if you want to access your super or receive a pension.

You won’t be able to access your super until you reach what’s called your ‘preservation age’, which is currently set between 55 and 60 depending on when you were born. You will also need to retire from the workforce or, if you plan to continue working part-time, start a Transition to Retirement pension. Once you turn 65 you can access your super whether you’re still working or not. You can read more on preservation age and transition to retirement pensions here.

If you plan to rely on a full or part Age Pension, from 1 July 2019 Australians must be 66 years or older to be eligible. You can check your eligibility here.


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2. How much money will I have?

In the 2019 National Seniors survey: Feeling financially comfortable? What retirees say, only 40% of respondents had no regrets about not saving more for their retirement. More than half said they were worried about outliving their savings.

In order to avoid regrets, if you haven’t already done so, tally up all your potential sources of retirement income. This will likely include superannuation, a full or part Age Pension and investments held outside super.

To find out how much income you can expect to generate from these sources, spend some time playing with ASIC’s MoneySmart retirement planner calculator.

Also include income you expect to receive from part-time work or a side hustle, such as renting out a room or granny flat on Airbnb.

3. What should my retirement budget be?

Everyone’s idea of financial comfort is different, so the best place to start planning your retirement income needs is to look at your current spending patterns. If you don’t already have a budget, do a quick reckoner to see where your money is going. There are plenty of budgeting apps and free online calculators to help you with this.

It’s generally suggested you will need around 70% of your pre-retirement income to fund a similar lifestyle in retirement. That figure assumes you will no longer pay tax, a mortgage or personal super contributions.

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Then think about how you want to live in retirement and draw up a new budget. ASFA’s Retirement Standard sample budgets may be helpful.

It’s generally cheaper to live in retirement when you no longer have work-related expenses. But you may also want to spend more on things like travel, new hobbies and leisure pursuits.

Healthcare costs also tend to increase as you age. And don’t forget aged care. We all want to stay in our homes for as long as possible, but the reality is that many of us can expect to need in-home or residential aged care in old age.

Finally, check your desired spending against retirement income from all sources. To paraphrase the Charles Dickens character, Mr Micawber: income exceeds spending, result happiness; spending exceeds income, result misery.

Money isn’t everything but having enough to live the way you choose will make your retirement years much more comfortable, secure and enjoyable.

4. Where do I want to live?

Your home takes on added significance when you retire. In fact, owning a mortgage-free home is often referred to as the fourth pillar of our retirement income system, after the Age Pension, super and other investments.

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Not only does the family home provide you with rent-free accommodation, it’s a potential store of wealth to be tapped into. For these reasons, it’s important to take some time to think about how and where you want to live in retirement.

Do you want to downsize to a smaller home or move to the country to free up capital? If so, remember that your home is not assessable under the Age Pension assets test so you may risk losing some of your pension entitlement.

Rather than sell your home you could take out a reverse mortgage or use the Government’s Pension Loan Scheme to source some extra income. For more information see SuperGuide’s, What is the Pension Loans Scheme and how does it work?

Some people think of their home as an asset they can sell if they need to fund residential aged care. This is a popular strategy given the high cost of aged care, but there may be consequences in terms of your Age Pension entitlements. This is a complex area so it’s wise to seek independent financial advice from an aged care specialist well before the situation arises.

5. Will I be debt-free by the time I retire?

Recent research by academics Rachel Ong and Gavin Wood found the proportion of homeowners aged 55-64 with mortgage debt tripled from 14% to 47% over 25 years to 2015. In the 65+ age group it went from 7% to 12%.

And it seems many retirees are using a sizeable chunk of their super to repay their mortgage and other debts such as car loans and business debt.


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The 2017 Household, Income and Labour Dynamics in Australia (HILDA) Survey found that 10% of men and 13% of women were spending their super this way. On average, those men spent $235,978 or 58% of their super and women spent $120,543 or 70% of their super.

Paying off the mortgage can be a good strategy, especially where it increases the amount of Age Pension you are entitled to. That’s because it turns an assessable asset (super) into a non-assessable asset (your family home).

Where it’s not so good is the loss of potential retirement income. Take the example of a single woman who plans to retire this financial year when she turns 66. She has $300,000 in super which would give her income of $35,222 a year including the Age Pension until age 90. If she spends $100,000 of her super balance to repay her mortgage, she will end up with income of $32,197 a year until age 90, a difference of over $3,000 a year. You can do your own sums with the MoneySmart retirement planner.

The emotional benefit of being debt-free should not be overlooked. But if the lost income would cause financial hardship, it may be better to work a little longer to pay down your debts and grow your super.

If you are planning to retire shortly, spending the time to go through all of your finances and choices, will help you relax and enjoy this new phase of your life.

Want to plan your retirement but not sure where to begin?

Become a SuperGuide Premium member and access independent expert guidance on how to plan your retirement, including how much super you need, how long you are likely to live for, whether you could be eligible for the Age Pension, the implications of retiring at different ages, how to prepare for retirement and much more.

Includes performance rankings for 235 super funds and 166 pension funds, more than 600 articles, how-to guides, checklists, tips and strategies, calculators, case studies, quizzes and a monthly newsletter.

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Learn more about preparing for retirement in the following SuperGuide articles:

What to do if the market tanks and you’re retired, or close to it

October 1, 2020

Countdown to retirement: Tips to help kickstart your retirement plans

June 1, 2020

Guide to transition-to-retirement pensions (TTRs or TRISs)

March 22, 2020

Financial advisers give tips on preparing for retirement

March 11, 2020

Five common financial mistakes people make just before retirement

October 1, 2019

5 ways sequencing risk affects your retirement

September 1, 2019

How to navigate the different phases of retirement

August 9, 2019

Timing counts if you plan to retire this year and start a super pension

July 21, 2019

How do I apply for the Age Pension?

July 1, 2019

Adjusting to retirement: 8 factors that can help

December 3, 2018

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Plan your retirement
Retirement planning for beginners
When should I retire?
How long will I live?
How much super do I need?
Will I get the Age Pension?
How much will I spend in retirement?
Financial advice
Retiring overseas
Preparing for retirement
Retirement planning strategies
Retirement calculators and reckoners
In retirement
Income in retirement
Super lump sums
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Age Pension
Working in retirement
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Aged care
Estate planning
Super death benefits
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All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs.

You should consider whether any information on SuperGuide is appropriate to you before acting on it.

If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions.

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