The retirement year is a transition but a little complicated and unsettling. But this phase is inevitable and a fact of life. After working hard all one’s life to fulfil dreams, aspirations, and responsibilities, one has earned well-deserved freedom to rest and enjoy. This phase should give you the freedom from guilt and the obligation to work towards fulfilling them. The retirement phase should help you live the rest-full years peacefully and stress-free, which is why a basic financial plan is essential to see one through post-retirement.
The financial planning must begin much before the retirement age/ time, which may vary from person to person, based on job type and personal choice or requirement due to health reasons. Deciding the age for retirement and planning for it accordingly, well ahead of the time would be the prudent decision for a crease-free well-earned retired life. One should ideally begin a steady savings plan post 45 to 50 years of age. It is wise to put aside a fixed amount every month in a separate account specifically marked towards retirement.
Here are some points for planning a good retirement plan:
1. Decide on the age for retirement and reason for retirement:
Nowadays, mainly due to the pandemic that has hit the world and seems here to stay, the unpredictability of life has hit closer to home. Therefore, one should assess the reason for retirement, which can be different for everyone and help narrow down the plan. Know whether you would like to be semi-retired or fully retired by that age. Often, one can choose a semi-retired life, post-age 55 years, where one continues to enjoy working but at one’s own pace till one is ready to take complete retirement.
2. Chart out the quality of your retired life by asking the right questions
Chart out the finances in synchronization with retired life and lifestyle. Are you keen on living a modest life without financial worries or a more luxurious lifestyle? Do you want to fulfil recreational dreams which were not possible to pursue earlier for various reasons? People who are soon going to reach old age need to choose their future life as per their needs, limitations, and desires.
- Do I have enough savings?
- What are the options available for investments? Choose an investment plan with reasonable interest rates building a steady income and returns, and can be flexibly designed around your requirements.
- Do you want to live an independent life or keen on checking in one of the luxurious retirement houses? These are crucial decisions based on savings, personal health, and supportive community (family and friends).
- Do you have a sound insurance plan to cover your medical, health and property maintenance costs?
- Are you eligible for the government pension/retirement benefits?
- Have you sorted out your legal documents well in time?
Ask the right questions and get your priorities sorted for your retirement age.
3. Saving for a worthy life in retirement homes
A retirement home would seem like a sensible choice for many. It would provide more freedom to those who choose such a life, with no worry over day-to-day life requirements. They do not have to worry about their health and support with adequate medical facilities or care during emergencies. They can enjoy the activities specially curated for the senior citizens. As one becomes older, basic tasks like cooking and keeping house can also seem daunting. There are many options one can choose from when choosing a retirement home for one’s old age. A typical retirement village in NSW could offer all these comforts. Scope around and choose a home that best fits your needs and pocket. And most importantly, save enough for such a life.
4. Consult an investment planner.
Industry research shows that individuals and couples planning to retire around age 60-65 need an annual budget starting from approximately $30,000 and going on till $61,000. They could opt for a modest or comfortable lifestyle with no loans to pay and decent health conditions. To get the retirement plans done efficiently, consulting an investment planner is a good idea for a clear and comprehensive retirement plan.
5. Get your Superannuation sorted.
Superannuation can make a big difference to retirement planning. Generally, one can begin accessing super on reaching age 55-60 (the preservation age). Superannuation is tax-free from the age of 60 years. For more financial flexibility, access a portion during the transitional/ preservation period. Alternatively, you can take the super lump sum on retirement and move it to an annuity or account-based pension. Consulting a professional here would be valuable.
All in all, thinking over one’s old age and planning accordingly as per our needs, aspirations, and financial state is an essential individual-based exercise that will help one live one’s life as independently and respectfully as possible.