How to retire richer in Australia

Last updated on 13 February 2024

Image caption: A richer tomorrow often comes at cost-cutting today. [Source: Shutterstock]

The information on this website is for general information only and does not constitute financial advice.

Key points:

  • If you decide that the super fund isn’t providing you with the returns you were hoping for or doesn’t provide good benefits, then it might be time to consider changing to a new super fund provider
  • Consider whether your liquid capital would be better invested in the market or on assets, such as property, land or commodities
  • Connect with a financial advisor to discuss retirement plans, in addition to asset management, estate planning and your current super fund or insurance provider

This edition of Your Retirement Living is a general checklist for a wealthier and prosperous retirement. It’s never too late to start planning your retirement and it can be beneficial to start sooner, rather than later.

A 2021 report from Allianz Retire+ found that 43 percent of Australians surveyed about retirement were unexpectedly forced into early retirement due to ill health, accidents, carer responsibilities, job loss or business failure.

Additionally, many people in Australia may fall behind and mismanage their potential prosperity in retirement by neglecting to update their plans over time.

If you are changing your super to a new provider and you are over 60, you need to consider what investment option you choose carefully. Everyone has a different risk profile and your age can have an impact on that.

Rolling over your super may also cause changes to your benefits or fees, so it’s worthwhile checking the terms of your rollover, including whether your insurance coverage will be impacted.

The Australian Taxation Office will take measures to consolidate low-balance inactive super accounts where possible on your behalf, however, the account may incur fee erosion if any of the following have occurred in the past 16 months

  • you have changed your investment options;
  • you have elected to maintain insurance on the account;
  • you made changes to your insurance coverage;
  • you made or amended a binding beneficiary nomination;
  • you have given your fund a written notice electing not to be a member of an inactive low-balance account.

It’s also important to address how you maintain your assets and find out whether any sales to preserve or extend your financial security could incur taxes.

Capital gains tax is included in your overall income tax, rather than existing as a separate tax. This means that you need to separate the portion of CGT required by the ATO to be paid during tax time.

By working this sum out with an accountant or financial advisor upon completing your asset sale, you can prevent unexpected tax shock later on.

Capital losses are also an important thing for retirees or part retirees to record and report during tax season, as selling an asset at a financial loss can reduce the overall tax you pay to the ATO.

When it comes to day-to-day life, consider the longevity or necessity of big-ticket items without necessarily having to give up on or deprive yourself of a comfortable life. Some retirement guides for budgeting will instruct retirees to trade name-brand groceries or medicines in favour of the generic variety, but there’s more to it than that.

Consider holidays, which retirees finally have the time to organise and enjoy at their own pace — how can you maximise your travels and not get suckered into spending?

Expect to spend nearly a third of your holiday budget on amenities and extremities, based on cashflow reports from Royal Caribbean — with cashless payment blurring the line between cost-tracking.

Instead, through organising flights and getting around in cities, you can visit local grocery stores, buy goods at their regular retail price without markups and track your travel budget easily — getting the same holiday experience at a reduced cost.

Similarly, consider whether that anniversary gift for a partner can be appreciated just as much through the use of lab-grown or ‘synthetic’ diamonds that are commonplace, but ultimately reduce the resale value for the recipient.

Big ticket items like purchasing a car might also be worth considering, as a payment plan for something that is no longer as essential as it was during employment could greatly add to the cost of replacing your existing mode of transportation.

If you would like to lead a richer life in retirement, how do you keep your life comfortable without sacrificing your savings? Let the team at Your Retirement Living know and subscribe to the newsletter for more information, news and industry updates.

Related content:

Seven steps to affordable housing

What a financial advisor can do for you

What should I ask a financial advisor?