6 important things to consider when retiring

We all want to retire on our own terms, and here are some important things to think about when planning your life after work.

1. When (and how) would you like to retire?

You can pretty much retire whenever you want, as long as you have the money to fund your life after work.
For most of us though, we’ll be relying on our super for income, and to access this money we need to reach our preservation age.

There are different ways you can choose to retire: you can transition slowly by cutting back your work hours (while continuing to earn an income and receive super), or you can stop work completely and fully retire. Either way, you need a strategy for retirement that involves thinking about how you plan to fund the lifestyle you want or expect to lead.

2. Will you have enough money to retire?

It’s one of the most frequently asked questions: how much do I need for retirement? 

There’s no hard and fast answer because we all have different financial circumstances and different expectations regarding the standard of living we’d like to maintain in retirement.

As a guide, ASFA estimates that the lump sum required at retirement to support a comfortable lifestyle is about $640,000 for a couple and $545,000 for a single person (which assumes that you’ll be entitled to receive a partial Age Pension).

Remember that we all have different ideas how we’d like to live in retirement, so you may need more or less than this amount. However, it’s a good starting point to help you work out how much you’ll need.

To help you work out how much you’ll have, use our Retirement Income calculator

3. How long will your money last?

Another big question regarding your retirement is: how long will your super last? 

The fact is, we’re healthier and living longer than ever before, and there’s the real risk we will outlive our retirement savings. In fact, according to research recently published by the World Economic Forum, Australians will outlive their super by around 11 years, so savings longevity is a real issue.
A handy resource is our Pension Drawdown calculator, which can give you an idea of how long your super could last. 

4. Lifestyle considerations – how will you live?

Most of us would ideally like to, at the very least, maintain our current standard of living, while others may have grand plans for a change in lifestyle and everyday hobbies. 

You’ll need to consider where you stand on certain lifestyle questions such as: where will you live? Will you downsize or move to another city? Selling your home to downsize will free up some money for you, but there may be social security implications if you hope to receive the Age Pension.

Thinking about your home, will you need to carry out repairs or renovations? Are there any other big-ticket items planned for the future (such as a car or a holiday)? 

Do you have money in savings? Will you be eligible for any government entitlements?

5. How financially prepared are you for retirement?

The last thing you want to be do in retirement is worry about money. For this reason, it’s not ideal to be carrying large debt into retirement, so it’s worth paying off debts while you’re still working and not drawing down on your savings.

Have you set a budget for your retirement living expenses? Remember that some costs – such as health care, for starters – will increase as you get older. 

Start making a retirement budget – ASFA has handily published detailed budget breakdowns which are a good starting point for working out budget amounts in retirement. 

It’s a good idea to prepare a budget that compares what you’re spending money on now versus what you’ll be spending in retirement (that’s because your expenses may change quite a bit once you retire). That way, you’ll be better prepared for the financial change of retirement.

Use our budget worksheet to get started.

6. How will you be spending your time once you’ve stopped working?

Are you ready to stop working? Many retirees report feeling mentally unprepared for retirement. This comes as no surprise; retirement is a huge change if you’ve worked all your life, and many people do struggle when there’s no reason to get out of bed each morning. 

For many people, working gives us a sense of purpose, a sense of identity as well as providing the social interactions that keep us fulfilled and feeling valued. Unfortunately, there is a high prevalence of depression amongst retirees as a result of losing their ‘sense of self’ as well as reduced social contact with others. The key is to be mentally prepared and have plans for how you will spend your time. 

After the initial novelty of not having to go to work in the morning, boredom often does set in. What will you do to occupy your time? Will you look after the grandkids? Take up hobbies or a sport? Work on projects around the house? Volunteer?

Get professional retirement advice

Our financial planners are here to help you plan your retirement so when do finally put your feet up, it’s on your terms.

It’s a good idea to get expert advice when it comes to:

  • Transition to retirement strategies
  • Budgeting in retirement
  • Tax minimisation strategies
  • Investing your pension 
  • Age Pension and other social security entitlements
  • Estate planning

Remember, we’re here to help, call Member Services on 1800 757 607 with any questions or to make an appointment with one of our planners.

The information on this page has been issued by Maritime Financial Services Pty Limited (MFS). It contains general information that doesn’t take into account your individual objectives, financial situation or needs. It’s important to consider how appropriate this general information is in relation to your situation before making an investment decision. We recommend that you seek financial advice before making any decisions regarding your super or investments. The information on this page is current at the time of publishing.