Is this your year to retire?

Money and Life
(Financial Planning Association of Australia)

If you’ve got retirement in your sights this year, we’ve got the ultimate checklist to help you retire in style. Discover how to prepare for this exciting new chapter in your life, safe in the knowledge that your finances will be taking care of you.

1. Explore your goals and make plans

Enjoying retirement to the full isn’t just a matter of money. It’s just as important to have a good long think about what you’d like to be doing when you’re no longer going to work. Will you want to travel or spend time with family or keeping fit? And when you’re faced with the idea of stopping work completely, you may want to continue working part-time or volunteer. A gradual transition to retirement can be a good way to manage your income needs too.

2. Work on your budget

When you do stop earning a salary your nest egg is going to have to last you for the rest of your life. So you’ll need to think carefully about what you have to draw on – assets, savings, investments and government benefits – and what you’ll be spending money on, including day-to-day expenses and household bills, your rent or mortgage and insurance as well as funding other retirement plans like trips overseas.

3. Reduce your debts

Interest on your mortgage, loans and credit card balances is a cost you’d rather not be paying once you’re relying on retirement savings for your income. If you have the funds to do so, it may make sense to settle as many of your debts as possible before you start planning and budgeting for retirement.

4. Budget for big ticket items

Don’t forget to include the cost of replacing your car, appliances or making major repairs to your home in your budget. The things you own and rely on will be ageing along with you and planning for these big bills will stop them having an impact on your day-to-day cash flow.

5. Check your eligibility for government benefits and super

Government benefits like the age pension and seniors card can make a significant difference to your income and budget but are you entitled? Depending on your circumstances, the process for being assessed and applying for these benefits can be complex so it’s a good idea to investigate this before you actually retire. There are also rules around accessing your super savings, including how old you need to be. Make sure you’re not counting on income from super if you’re still too young to draw on it.

6. Find out about tax

There are tax benefits and concessions available to retirees receiving income from their super, but these depend a lot on how you invest your money. And government policies and legislation around super investments and income and how they are taxed has changed a lot recently. So when it comes to choosing tax-effective investments that offer opportunities to earn a stable income, professional advice from a financial planner can help you make the right decisions.

7. Make a retirement income