How to make sure you’re retirement ready
What are the main challenges facing senior Australians looking to retire?
There are three main challenges: The first is working out a retirement plan. What do you want to do in retirement? Retirement is like gifting yourself time—35 to 60 or even 80 extra hours a week. What will you do with it?
It’s like making a personal inventory of: your passions; what you like to do (including hobbies); and what you want to achieve. Then, if a couple, how does your partner fit into this? You could start by trying to work out what you expect a typical week would look like.
Second: There’s recent research that shows that individuals in their 50s are sacrificing wellbeing for financial gain. This is a time when you will likely be at your highest earning capacity and the temptation is to focus on that both for the present and for retirement.
Unfortunately, it usually takes away from being able to live a balanced life, and that could impact on health or wellbeing later.
Third: Realise that retirement is not all about money. If you had to choose between health and money, the choice is obvious. Money can get you a comfortable bed in an up-market nursing home. Good health opens up a whole lot more options.
Many seniors might not know where to look for help when it comes to money advice? Can you direct them to a couple of sources?
Unless you’re an expert in the field, finding a good professional (a financial planner/adviser, for instance) is important. The super-taxation-pension system is incredibly complex and you need to be able to know how to take best advantage of what you have.
You could begin with your bank or super fund. They will be able to direct you to their own financial advisers. The first consultation will probably be free. Remember, if you don’t have confidence in the financial planner you meet with, trust your gut and find someone else. And, if you don’t like something they are suggesting, it’s your money, not theirs—that puts you in charge.
Or you can receive independent advice. The Financial Planning Association website could be a good place to start. This post about five things I learned from a financial adviser may prove helpful.
Are there any tips or tricks seniors already in retirement can utilise to get the most out of their nest egg?
It always helps to have a large nest egg. But even then, would we ever think we had enough?
Two common sense tips come to mind: The first is related to the previous question. Make sure you find a good financial planner who can assist you in getting the most out of your finances.
The second is to make sure you live within your means. It’s an old concept, but budgeting will help so you don’t eat away at your nest egg too quickly. For financial planning, it’s unfortunate that you don’t know when you’re going to die. For living life it’s fortunate that you don’t.
The bottom line is this: Because you don’t know how long you’ll need your nest egg, you need to be conservative in your use of funds.
What are the ways improving your finances can improve your quality of life in retirement?
Money allows you to experience more, do more and have more. It can take you from three-star living to five-star living, and who wouldn’t like that? But it’s important to remember that real quality of life has more to do with how you live your life than how much money you have.
The widowed pensioner who loves working in her garden and sharing the produce with her neighbours can have a better quality of life than the multi-millionaire in his mansion.
Social researcher Hugh Mackay in The Good Life makes this point: “The crucial test of a life well lived is the quality of our responses to the needs of others. Everything else is peripheral and mostly trivial. It is in loving we are made whole.”
You can find Bruce’s new book Retirement Ready? here.
Related links:
Major changes for age pension in 2017
How Aussies compare to retirees from other countries
It’s not too late to reclaim your lost super