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Preparing for Retirement – Financially and Beyond
As we get a little older and start preparing for retirement – the exact picture we have in our head about what retirement looks like will differ from person to person. It might be travelling the world, spending time volunteering, or pursuing projects that are too time-consuming to tackle while you’re working. Regardless of how you see retirement, there’s no doubt that having enough money to pursue the retirement lifestyle you desire tops most peoples’ lists – but oftentimes they neglect to consider the other critical factors at play. The activities you’ll undertake, the healthcare you may require, the legacy you want to leave behind. All this and more should factor into your decisions when preparing for retirement. Let’s explore some of the significant ones.
Preparing for Retirement – Are You Mentally Ready?
There is a fairly simple question to ask yourself here – why do you want to retire? Much like the lifestyle people desire in retirement, the reasons for leaving the workforce for good will be different for different people. Some retirees find it difficult to adjust away from the routine of full-time work. As such, reducing your working hours to part-time may be a more beneficial transition to retirement pathway for you, and will also allow you to continue to earn some form of income before you fully retire.
In preparing for retirement, you should also ensure that you and your partner are on the same page. Take time to reflect together on what you want to do with your time as a couple, how you will manage spending more time together, and which activities you may want to do individually. Some couples struggle with making the transition from seeing each other only on mornings, evenings and weekends to suddenly being with their partner 24/7, so make sure you have alignment on how you will manage this new situation and make the best of it.
While we will cover money later in this article, the mental side of depleting ones accumulated wealth to fund retirement is something that can impact retirees. Having an established relationship with a financial adviser is important here, as they can provide modelling to give you peace of mind that you will be financially secure if you can stick to an appropriate financial plan.
Preparing for Retirement – How Will You Spend Your Time?
Full-time work typically takes up 40 or more hours per week. While you’re in the groove with going to work each day and fitting in your other activities around that, it can come as a bit of a shock to some retirees just how much free time they now have on their hands. That’s why having at least a rough outline for how you will spend your time is a prudent approach to preparing for retirement. You will have more time to enjoy personal pursuits and projects that you may have previously never had time to achieve, so consider making note of these. Importantly, consider how you will give your retirement years a sense of purpose, and allow for time to focus on your physical, mental and social wellbeing.
Preparing for Retirement – How Much Money Will You Need?
Now to the factor that most people rely on to determine if they are ready to call it a day – money. Your day-to-day cost of living is generally the primary concern, ensuring you can cover your bills, keep a roof over your head and put food on the table. This is linked with the above “how will you spend your time” as your daily spending will be determined by what it is you may do on a typical day. The ASFA Retirement Standard is the leading, up-to-date source on the amount of money most Australians need to retire, based on the lifestyle they are looking to achieve.
You may have pastimes that you enjoy (and may wish to do more of), aspirational bucket list items to tick off, home renovations to undertake now that you’re spending more time there, or any number of other things that will require additional spending. Getting a well-considered and realistic budget in place before you retire is the key to ensuring you are not caught short and struggling at a time where you should be enjoying your best years.
Further things to consider when planning for retirement include your entitlement to Centrelink (or lack thereof); how much money you should or should not keep in superannuation; and what your housing options are (e.g. downsizing, renovating, making your home more accessible). To navigate the process of retirement planning and ensuring you will have enough money to truly enjoy the things you want to do when it’s time to leave the workforce, you should engage with a financial adviser.
The Wealth team at McKinley Plowman have decades of experience in Retirement Planning, helping clients map out their road to retirement, ensuring their wealth is grown and managed in a way that aligns with their goals, and then facilitating the necessary steps to transition them into their well-earned retirement. To see how we can help you do just that, please get in touch with us today via our website or call us on 08 9301 2200.
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