Planning for a secure retirement

Last updated on 28 September 2023

Funding Your Retirement

Older couple discussing their retirement — You need to start thinking early about how you want to live when you retire and how you are going to fund it. [Source: iStock]

Key points:

The earlier you start planning for retirement, the more time you have to prepare for your new life
Consider future health and aged care you might require in your retirement plan
People are likely to be less panicked about retirement if they engage a financial planner early on into the process

Retirement requires planning to make sure you are prepared for this change in your lifestyle, not only mentally but also financially.

To be able to live comfortably and well in retirement, you need to plan and prepare.

So what is involved and where do you start?

Rose Bouton, Principal Financial Planner and Aged Care Specialist at We Plan Financial in Victoria, says when it comes to retirement planning, it’s a case of ‘the earlier the better’.

She explains that she finds people tend to be less panicked about retirement if they engaged a financial planner or advisor early on into their planning.

Early bird gets the worm

Starting your retirement plan early ensures you will have better outcomes and make a more positive impact on your planned objectives.

Ms Bouton recommends that people not only consider their lifestyle wishes once they retire, but also prepare for increased care needs that will likely occur as they get older.

Her advice is that you should be realistic about when you are going to retire, consider future medical conditions you may develop, or if you should plan to work for longer to better boost your savings and superannuation.

Ms Bouton adds that you should try to keep your expectations in check, as dreaming about your ideal retirement doesn’t necessarily mean it is a realistic goal.

Top five tips for planning your retirement

Watch your super
Keep track of how spread out your super is. People tend to open up new super funds, resulting in multiple super accounts. This can add up to unnecessary fees on your super. If possible, consolidate your super into one account. Ms Bouton says it is also important that they understand how their super is being invested, so it is aligned with your preferences and appropriate risk profile.
Protection
Insurance is important for your car, your home, and your health, but people tend to forget their biggest asset; themself. However, many people don’t realise that being able to work for an income is really important, so if you lose the capacity to work it can have a big impact on your life and financial situation. Ms Bouton recommends having adequate insurance cover like personal insurance to protect yourself from different events that can occur that may have an impact on your ability to save for retirement. This could be life insurance, Total and Permanent Disability (TPD) Insurance, Trauma Insurance, or Income Protection Insurance. This can assist you and your income if an unexpected event makes you unable to save for retirement.
Estate planning
Having your important documents up to date is essential as you move into your retirement years. Your Will, Advance Care Directive, and other important documents are a vital part of estate planning. It makes sure your beliefs and rights are respected if you ever lose capacity. Estate planning also protects your financial wealth and assets during a time of your life when you are no longer able to make decisions.
Track your budget
Tracking your expenditure can be a vital part of meeting your retirement plan goals. If you don’t track your spending — start! You cannot reach your retirement planning objectives if you don’t know where your own money is going. Tracking your spending gives you an idea of where you may be able to save towards your retirement nest egg.
Engage a financial planner
Experts in financial planning can take a load of stress off your preparation for retirement. They have the strategies and financial tools to organise your financial affairs and meet your retirement goals. With so many unknowns in retirement, financial planning has the ability to break down the financial barriers you face.

Number one priority

Another important consideration when planning your retirement years is around possible future increased care needs. While most people are in good health when they retire, the reality is that over time health may decline and there may be a need for additional supports or care later in life.

“It’s something people don’t generally want to plan for,” explains Ms Bouton.

“We know very well that there are three clear stages of retirement. One being the early days when it’s all quite active, fun, and people are going on cruises and doing that sort of stuff.

“Then there is a middle stage where there is quite more downtime and things are starting to get a little bit harder and medical conditions are starting to creep in. And then the care stage, which can last for a number of years, this tends to be when they hit residential aged care.”

According to Ms Bouton, the number one priority of her clients is always living independently at home for as long as possible.

So if you want to meet this goal, you need to start thinking and talking about how you want to live when you retire, how you are going to fund this, and plan for the possibility of requiring extra help or care around the home later on. Otherwise, you may be left without any choice and the decision is taken out of your hands.

How are you securing your retirement funding? Tell us in the comments below.