Are you ready to retire?

Last updated on 25 September 2023

Funding Your Retirement

A financial planner will be best placed to help you figure out how financially prepared you are to retire, as well as assist you in making positive changes that will benefit you in retirement. [Source: Shutterstock]

Key points:

Before retiring you should be across whether you are financially prepared for retirement or whether it is the right time to retire
A financial advisor can assist you are planning for your retirement
You don’t need to only worry about your finances when it comes to retiring, you also need to think about emotionally and mentally preparing for retirement

As the Australian life expectancy age increases, many older Australians need to be assured they can support themselves, on average, for 20 or so years in retirement.

Taking the time to consider your financial situation can be really beneficial before deciding to retire.

What to consider

When it comes to planning for your future in retirement, there are a few different things to consider, including:

Retirement savings and superannuation – Making sure you have an idea of how long your savings will last you after you retire, when you might start accessing your Super, as well as when you might need to access the Age Pension.
Lifestyle – According to the Association of Superannuation Funds of Australia (ASFA), to live a comfortable lifestyle in retirement as a single person aged 65 and over, you would need $50,004 a year, or $70,482 as a couple. To live modestly, a single person aged 65 and over would need $31,785 a year, or $45,808 as a couple. These numbers are based on the idea that you own your home, have no mortgage, and are in good health.
Accommodation – Have you figured out what your home situation will be like over the next decade or how it might look when you become more frail? You may need to consider downsizing your assets, decide if you will relocate somewhere new, or move closer to family. These are big things to think about. Make big decisions earlier rather than later, as you don’t want to be downsizing and relocating last minute after a crisis hits. If you do downsize, there are a lot of superannuation incentives for older people who sell their home and downsize.
Debts – Do you have debts and how much? Many older people enter retirement with mortgages or other large debts. A financial advisor will always recommend you enter retirement with as little debt as possible, and preferably no debt at all!
Big expenses – Besides financing the day-to-day, it’s important to consider if there are any big expenses you intend to make while you are in retirement. It may be worth considering whether you can make big purchases before you retire or if it’s best to wait a while. A financial advisor can help you work through the best options for you.
Future aged care – In any retirement plan, there should be money and planning put into the possibility of future aged care. You can never know when you might require home care or aged care services, and many older people don’t think about it, or want to think about it, before going into retirement. But pre-planning for this possibility will make all the difference on your retirement income and not leave you feeling unprepared.
Foolproofing your retirement – The best way to ensure that your retirement is rock solid is to make sure you have appropriate estate planning in place. Estate planning can include Enduring Power of Attorney or Guardian, an Advanced Care Directive, and a Will, as well as insurance, like life insurance or home contents insurance.

A financial planner will be best placed to help you figure out how financially prepared you are to retire, as well as assist you in making positive changes that will benefit you in retirement. To learn more about how a financial advisor can help, read our article, ‘How do financial advisors help with retirement planning?‘

Questions to ask yourself before retiring

Before you jump into your golden years, it is important that you ask yourself the below questions:

Am I in debt still or do I have a mortgage? If so, is it a lot?
What lifestyle do I want to live in retirement and can I afford that?
Do I have enough savings and how long will my savings last before I need my super?
How should I access my super when I get to that point?
Will I need the Age Pension?
What large expenses do I want to make in retirement?
Where am I planning to live? Am I going to move or sell my home?
Is aged care services considered in my financial retirement plan?
Have I talked to a financial planner to assist me with my retirement plan?

There is a lot to consider and it can be confusing to fully understand your own finances or strategies that help boost your funding for retirement.

Asking lots of questions of your financial planner and understanding the answers can go a long way to being well-prepared when entering your retirement years.

Emotionally preparing for retirement

Retiring isn’t just about finances, you also need to be sure that you are emotionally and mentally ready for retirement.

Many people may find the first couple of months great, even fantastic! But it is common for older people in retirement to lose purpose or become unsure of what to do with themselves.

So before retiring, do you know what you are going to do to keep yourself busy? Do you have a volunteering opportunity in place? Will you join a local sports club or garden group?

When people leave the workforce, replacing it with charity or volunteering ventures can ensure that you still have purpose or feel like you are contributing to your community.

Many older people are not prepared for what life will be like once they retire and hang up their work boots. But putting effort into emotionally and mentally preparing for this new adventure in your life can make all the difference!

To learn more about emotionally preparing for retirement, read our article, ‘Journey into retirement and how life might change‘.

Have you figured out if you are ready to retire? Tell us in the comments below.