The essential questions to ask yourself to ensure your retirement is truly enjoyable

While retirement marks a thrilling phase in life, it’s natural for concerns about financial stability to arise. The question of having enough money for a comfortable lifestyle throughout retirement often looms large for many.

Yet, preparing for this chapter is more than just financial groundwork; it involves aligning with your lifestyle preferences and health needs. Crafting a retirement that is not only financially secure but also enjoyable is crucial. By posing thoughtful questions, you can pave the way for a comfortable and enriching time in retirement.

Your golden years are yours to embrace, and these pivotal questions will guide you toward a retirement that resonates with joy and contentment.

Are you ready to retire? 

While some people may have a set retirement age or financial target, it is essential to consider whether you are emotionally and mentally prepared for retirement. It’s important to ask yourself whether you are ready to give up the structure, routine, and social interaction of your current job.

Additionally, you should consider whether you have enough hobbies, interests, or passions outside of work to keep you fulfilled and happy during retirement. Lastly, financial readiness is a critical component of retirement planning. You should assess your current financial situation, including your savings, investments, and other sources of income, to determine whether you can sustain your desired lifestyle in retirement.

Wealth Coach Andrew Woodward from The Investor’s Way, points out that “there are some basic matters to consider when knowing whether you are ready to retire”, which include:

• What activities will you undertake to keep your brain and body active: Transitioning from an active work life to retirement where you have the time to do the things you want requires some thought about what those things will be on a consistent basis.
• Your physical state, and what medical needs will you have: This is a function of the question of how long you expect to live. While nobody knows the answer to that question, it is important to have an understanding of your expected life so you can manage your money to last that long.

How much money do I need to retire comfortably?

Once you know that you are ready to retire and have an idea of the lifestyle you want in retirement, the next question is how much money you will need to save to achieve that lifestyle.

According to the Association of Superannuation Funds of Australia (ASFA), the cost of a comfortable retirement has risen, reaching a high of $71,724 per year for couples in the September quarter.

Singles aren’t spared from the financial strain either, with a 1.5 per cent increase pushing their annual expenditure to $50,981.

This amount will vary depending on your lifestyle, the cost of living in your area, and other factors. Therefore the first step in determining your retirement income is to assess how much money you’ll need to fund your desired retirement lifestyle.

Woodward stresses that “the most important matters to consider include your income sources, monthly expenses and the likely period of time that your assets will be able to generate an income for you.”

“Your income sources are the most straightforward, knowing where your income is coming from is the first step. You might have investments that produce an income, superannuation entitlements, and maybe a pension,” he explains.

Once you have a good idea of your income sources it’s important to have a look at your expected living expenses.

“It is important to always live within your means, so knowing your living expenses will enable you to plan the lifestyle you can afford based on the income you have coming in,” Woodward says.

Another important aspect to consider is the duration at which your assets will produce an income which Woodward deems “crucial to understand”.

“Since it is possible that during your retirement years you may need to use some of your investment capital for unexpected costs, or maybe even your living expenses if your income changes for any reason,” he explains.

How to access your superannuation?

One element of retirement that is common across the board is accessing superannuation to fund your retirement lifestyle.

In order to access your superannuation, you will need to meet certain conditions of release, as set by the Australian government. These conditions include reaching preservation age, permanent retirement, or severe financial hardship.

The process of accessing your super will vary depending on the fund and the condition of release you are claiming under. However, most funds will require you to complete a withdrawal form, provide proof of your identity, and provide evidence of your eligibility for the condition of release.

In Australia, you can generally access your superannuation funds when you reach your preservation age, which is between 55 and 60 years old, depending on your date of birth. However, there are some exceptions, such as if you have retired or become permanently incapacitated. It’s best to check with your specific super fund for their rules and regulations regarding accessing your funds.

The actual physical process of accessing your superannuation can include:

• Completing a withdrawal form from your super fund and submitting relevant documentation with an Australian bank account number.
• Early release payments on compassionate grounds applications need to be made directly to the ATO.
• Further details of conditions of release can be found in the disclosure documents of your superannuation fund and the ATO website.

How will I adjust my retirement income if my needs change?

It’s important to consider how you’ll adjust your retirement income if your needs change over time. You may need to tap into additional sources of income or adjust your investment strategy to ensure that you can meet your changing financial needs.

Be prepared to adjust your retirement income plan as needed to ensure that you can maintain your desired lifestyle during your retirement years.

If you have moved into retirement and discover that your income is not sufficient to meet your expenses, Woodward proposes taking on part-time or casual employment.

“Maybe there are some hobbies of yours that you like that can assist in deriving an income,” Woodward says.

“Look into whether there are some paid jobs you can do using these hobbies or skills you enjoy. There are a lot of retirees doing hours in Bunnings stores or with Charities for a little extra cash.”

Whereas, founder and CEO of Stockspot Chris Brycki highlights the importance of “reviewing government benefits”.

“Retirees can review their eligibility for government benefits such as the Age Pension and other social security payments, and ensure they are receiving all the benefits to which they are entitled,” he says.

While reviewing what benefits you are entitled to it’s also worth regularly reviewing your budget to ensure your finances are on track.

“Retirees can also review their expenses, create a budget and make adjustments to their spending habits to save money,” Brycki advises.

“Retirees can seek advice from a financial adviser to help make the best decisions for their financial future.”

Where will I live in retirement?

You will have several important factors to consider when deciding on your living arrangements in retirement. One of the most critical factors is affordability, as you may be on a fixed income and need to budget carefully to cover expenses.

You should also think about your health and mobility needs, and whether your living situation accommodates any potential changes in your physical abilities. Other important considerations include proximity to family and friends, access to healthcare services, and the availability of transportation.

Choosing the right living arrangement for retirement is a significant decision that requires careful thought and planning to ensure a comfortable and fulfilling lifestyle. From ageing in place to moving to a retirement community, there are various choices available. Each option has its own advantages and disadvantages, and it’s crucial to understand what each offers to make an informed decision.

• Ageing in Place

Ageing in place refers to staying in your own home or community as you get older. This option is ideal for those who value their independence and want to maintain their daily routines. Ageing in place allows you to stay close to family and friends, and in the community which you’re familiar with. Additionally, it can be more cost-effective than moving to a new home.

• Retirement Communities

Retirement communities are designed specifically for seniors and typically offer a range of amenities and services. These communities can be either independent living communities or assisted living communities, depending on the level of care needed.

• Downsizing

Downsizing your home refers to the act of moving into a smaller and more manageable residence. This could mean selling or renting out a larger house or apartment and moving into a smaller one that requires less maintenance, upkeep, and expense.

There are many reasons why someone might choose to downsize their home. For example, empty nesters might feel like their current home is too big now that their children have moved out, and downsizing could be a way to reduce their expenses and free up more time for other activities

Planning for a comfortable retirement requires careful consideration of a variety of factors.

By asking yourself these key questions, you can create a plan that will help you achieve the retirement lifestyle that you desire.

Remember that it is never too early or too late to start planning for retirement and that the sooner you start, the better prepared you will be for the future.

IMPORTANT LEGAL INFO: This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.