The Moreton Group’s Trent Klein was recently a guest presenter on a webinar hosted by the Australian College of Perioperative Nurses handling all the tough issues of why plan for retirement and how much money you need to retire.
The summary of his talk is below and the full webinar can be heard at
By Financial Advisor Trent Klein
What is retirement?
Retirement doesn’t have to mean finishing work. It is when you have a choice to work or not. What you do with that is up to you. It can be part-time work, or taking some time off and coming back.
What are the benefits of retirement planning?
Starting earlier gives you knowledge of what’s possible. Even at a young age it’s important to know where your super is invested and how you benefit from extra payments, even small ones.
Planning will show you opportunities you haven’t thought of and give you more time to think ahead. The more time you have, the more flexibility you will have. Nothing is fixed in retirement, it should be very flexible and that flexibility gives you the ability to adapt and change. So dealing with things, like sickness in your senior years can be easier.
There is also a mental benefit. By planning you have a better transition into retirement. You’ll be more comfortable about retirement. You get more out of it, enjoy it more and have the confidence to do what you want to do.
The more you think about it, the more you will get used to it, and the better off you’ll be.
If I plan earlier will I retire earlier?
Not necessarily. Sometimes planning retirement means enjoying your job more – because you are there by choice. Not because you think you have to be there.
Planning also helps people go to their employer and have conversations about retirement so both can plan better because they are more knowledgeable.
How much do I need to retire?
There is a lot of misinformation about this.
A good reference is the Australian Super Funds Association (a combination of super and retail funds). They have a comfortability standard that shows how money works over time.
It is not as easy as taking your super amount and dividing it by how many years you expect to live. That will probably give you a figure way higher than you need.
The ASFA figures are updated every 3-6 months and it has been a long running benchmark.
What if I want to retire before the pension age?
The age at which you are eligible for the pension changes depending on when you were born. But many people can retire earlier based on super access after 60 years of age, accessing something like Job Seeker payments which you may be able to receive if you volunteer in the community, downsizing your home and putting money into super, not repaying a home loan as quickly or perhaps the sale of a large asset such as an investment property, etc.
Each situation is different so it is worth having the conversation with a professional advisor.
You will also need ongoing advice because things change, including legislation. So having someone who monitors your situation and makes sure you are getting the most out of the changes is very beneficial.
The planner also makes sure things go to plan. That you have the money when you need it throughout retirement, and that you spend it and not save it all because you are worried you might not have enough.
Also do some research to provide yourself with some security. These websites are helpful.