What do you need to think about when deciding when to retire?

When it comes to planning for retirement, it’s important to prepare yourself emotionally and financially. If you’re building your retirement plan, here are some things you may want to think about.

What do you need to think about when deciding when to retire?

You May Need to Fund a Longer Retirement

Australians are living longer so more of us may need a bigger pool of savings to fund longer retirements. In 1974-75, there were 80,000 people aged over 85 and that number is projected to reach around two million by 2054-55.*

To avoid some of the common money mistakes that happen during retirement, you may need to explore the possibility of working for longer and delaying retirement or consider returning to the workforce.

Your Health May Affect Your Ability to Work Longer

Health is a key factor when it comes to participating in the workforce, particularly as you get older. This can affect your ability to accumulate super and other savings to fund your retirement.

More people aged between 60 and 70 report fair or poor health than other Australians. It’s also predicted that by 2035, one in four men and one in five women in their 60s will have poor or, at best, fair health.*

This means that if you’re saving for retirement or contributing to your super fund, it may be helpful to start sooner rather than later.

You May Need to Supplement The Age Pension to Fund Your Retirement

The Association of Superannuation Funds of Australia’s Retirement Standard shows that a 65-year-old single person retiring today needs an annual income of $44,224 to fund a ‘comfortable’ lifestyle in retirement, assuming they’re relatively healthy and own their home outright.*

By comparison, the maximum age pension rate for a single person is $24,770 a year.*

This means that to fund a comfortable retirement, you may need to have almost double the amount of income provided by the age pension, either through your super funds or other sources of income.

Another thing to keep in mind is the age you can become eligible for the age pension and the age you can access your super typically won’t be the same. Your access to the age pension will depend on your date of birth and other eligibility criteria, while accessing your super depends on when you reach your preservation age and retire.

You May Want to Have Money Set Aside for Recreational Activities

Australians are living longer and more active lives. According to the ASFA Retirement Standard, singles and couples living a comfortable lifestyle spend around 24% of their weekly budget on leisure and recreation.*

So it’s a good idea to give some thought to your hobbies and recreational activities once you exit the workforce. After all, your retirement is the time to sit back and enjoy the finer things in life, so you need to be able to afford to do the things you love.

Toowoomba Financial Centre Pty Ltd ABN 88073088070, trading as TFC Financial is a corporate authorised representative of Charter Financial Planning Limited ABN 35 002 976 294 Australian Financial Services Licensee License number 234665. If you no longer wish to receive direct marketing from us you may opt out by calling us on 07 4639 1399. This article contains general advice only. You need to consider with your financial planner, your investment objectives, financial situation and your particular needs prior to making any strategy or product decision.