Are you retirement ready?
Retirement | 11/07/2019 |
7 min read
Transitioning from working life to retirement is a big step. If you’re used to a 5-day week and the security of a monthly pay cheque there are both economic and lifestyle issues to consider.
So how do you know you’re ready to make the switch? We’ve consulted industry professionals and our own financial planners to come up with a checklist of questions you should be asking yourself to see if you’re Retirement Ready.
You can learn more by joining Equip at an upcoming retirement seminar. These are held throughout the country, and available to all members at no extra charge. Find one near you by clicking here.
In the meantime, here are five questions worth asking.
1. Do you have enough super to support your lifestyle
According to ASFA (the Association of Superannuation Funds of Australia), a couple needs approximately $640,000 in retirement savings for a comfortable lifestyle. For a single person that number is $545,000. Those figures translate to an annual income of $61,000 and $43,000 respectively.
When talking about the ASFA numbers it’s important to note two things. 1. They assume you own your home outright. 2. They’re based on take home (after tax) income.
For an overview of your retirement savings and what that means in annual income the Equip MyFuture Calculator is a great place to start.
2. How will you access your money
Building up a healthy superannuation balance is important, but how you access and invest your money in retirement will also determine how long it lasts.
Transferring your super balance into an Account Based Pension is the easiest and most common way to start your retirement. This allows you to draw down an annual income from your savings while the balance continues to earn investment income in a tax free environment.
Alternatively, Equip offers a simple solution called MyPension, which looks after your investments and helps make your money last longer.
A third option is to withdraw all or part of your balance from the super environment. This has both taxation and Age Pension implications, and we strongly recommend consulting a financial planner before making a decision.
3. Do you have debts?
The ASFA numbers we mention above assume that you own your home outright. If you’re paying rent or continuing to service a mortgage in retirement the numbers will vary and you’ll likely need more super.
Having outstanding debts as you approach retirement isn’t necessarily a problem, but it does require some planning. For example - do you use your super to pay off your mortgage? There’s no simple answer, but speaking to a financial planner can help you understand your options and what they mean in the long term.
4. Are you eligible for government entitlements
Depending on your superannuation balance you may be eligible for a variety of government benefits and subsidies. While the Government Age Pension is only $21,000 per annum for individuals, many people live on a combination of the Age Pension and their superannuation savings in retirement. This means that most people don’t need a $1 million in super, and even modest super savings can be used to boost your income.
Equip’s Retirement Calculator can show you how long your retirement savings will last and when you’ll be able to claim a full or part pension. Speaking to a financial planner can also help you understand your options, possible entitlements, and how to apply for them.
5. How will you spend your time
This one tends to get overlooked, but figuring out what to do with all that free time can have as much impact on your retirement as your finances. If you’re used to the comradery of work and seeing your friends every day it can be difficult to lose that connection.
Couples who have spent decades in a routine can also face challenges when their schedule is turned upside down, and they suddenly find themselves together at home during the day.
If you want to get the most out of retirement you’re going to have to find sense of purpose, and a way to fill your retirement years. This may mean a new hobby, volunteer work, social groups, or fitness.
What should I do next?
If you’re approaching retirement and starting to think about the issues outlined above please join Equip at one of our upcoming Retirement Seminars. You’ll hear from industry experts, and can speak with a financial planner about the services we offer.
Find a retirement seminar near you. Click here.
This information is provided for general information only. It does not take into account your personal objectives, financial situation or needs and should therefore not be taken as personal advice. You should consider whether it is appropriate for you before acting on it and, if necessary, you should seek professional financial advice. Issued by Equipsuper Pty Ltd ABN 64 006 964 049 AFSL 246383. MySuper Authorisation Numbers 33813823017672 and 33813823017518 (‘Equip’, ‘the Fund’ and ‘the Equip Rio Tinto Fund’).
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