Simple Steps to Get Ready for Retirement

Work out what you value

Duggan says to work out what you value you need to ask some of the following questions:

• What does your retirement look like?
• Do you want to help your kids?
• Where do you want to live?
• Are you going to be eating out regularly?

“These are things you need to think about and sometimes there are choices and trade-offs to be made,” she says. “But if you understand what makes yourself tick then you can choose whether your behaviour needs to be changed or not.”

Duggan adds people’s expenditure is generally expected to decrease when they retire. “If you are fortunate enough to get a pension card then you can get discounts on your rates, utilities, or car registration, although you don’t want to rely on this in case the government changes the social security system,” she says. “But you do need to factor in the things you no longer need such as the corporate wardrobe, the parking fees, the fact you won’t be driving as much. You may also decide to drop back to one car. Knowing your expenses may fall in retirement goes some way in relieving retirement anxiety.”

Tools such as Colonial First State’s Retirement Calculator or ASIC’s Retirement Planner can help you work out what income you are likely to have from super and the age pension when you retire, and how contributions, investment options, fees and your retirement age can affect this income.

Early savings habit gives you control

Danny Natale of Financial Planning Adelaide says retirement often brings up feelings of anxiety but not for the reasons most people think. He says people are more anxious about the changes they’ll face when they go from a situation where they’ve worked for 35-40 years and are drawing a pay cheque to everything stopping.

“Articles in the media focus on how much is needed in retirement but this isn’t what people ask about when they come seeking retirement advice,” he says. “The ones that get advice are able to take more control rather than feeling like a victim. And once they focus on what they’re doing, they find they start spending less.”

Natale stresses that, the less you have saved, the fewer options you have. “For example, someone who only has $100,000 in super and wants to retire at their pension age and live on $40,000 a year, can draw down $5000 each year and receive the full pension,” he says. “If they want to live on $60,000 a year then they either have to keep working, or learn to live on $40,000 a year.”

Finally, Natale says the earlier you focus on building up your retirement savings, the better. “It doesn’t all have to be in superannuation as long as you build your assets up,” he says. “But whatever method you use to save, the better prepared you are for retirement, the less anxiety you’ll likely have.”