Planning for life after retirement

Five expert tips to help you plan and enjoy life when you retire.
A happy retirement life starts with planning for it.Getty

Retirement is one of the biggest life changes we’ll ever experience. With so much time spent in the workforce, the idea of retiring can be both exciting and daunting because of all the questions it raises.

So, if you’re getting ready for life after retirement or are wondering where to start, these tips help shed light on a few of the most important factors to think about.

1. Get ready for changes in your income

As well as not going to work Monday to Friday, one of the biggest changes in retirement is your income. Instead of a regular salary, it will typically be paid through superannuation, the Age Pension and possibly other investments.

“Getting used to no more salary is scary for many,” Helen Baker, licensed financial advisor and founder of On Your Own Two Feet tells The Australian Women’s Weekly.

“Planning your spending and how to support that through superannuation pension payments, annuities, age pension or partial age pension all play in a role in supporting the lifestyle you want.”

The government’s MoneySmart website has a free retirement planner that helps you get a sense of your income and potential fees.

Many superannuation funds also offer free retirement resources and guides.

“Often the biggest obstacle for people is simply knowing where and how to start preparing for retirement,” Aware Super’s Head of Retirement, Jacki Ellis tells The Australian Women’s Weekly.

“Reach out to your super fund and use the help and support they can provide, often at no extra cost. It really will help replace any feelings of concerns with those of excitement, happiness and optimism.”

Jacki Ellis, Aware Super’s Head of Retirement

She says Aware Super has been proactive in helping members prepare for life in retirement, including with a Retirement Guide released earlier this year.

“It considers retirement as a lifestyle, because we know finance is the enabler and our role is to help people set up a life they really love in retirement.”

You can contact your super fund directly to find out what resources are available to help you plan.

You could also consider discussing your goals with a financial planner. Your super fund may offer this service, or you could pay to work with a licensed financial advisor.

Reviewing your finances and getting key admin done early are two key aspects of planning the retirement life you want.

2. Set aside time for retirement “life admin”

Lining up all your ducks can make it easier to navigate life’s ups and downs in retirement. This can be different for everyone, but typically involve both financial and legal processes.

Financial admin

Aware’s Jacki Ellis says this often starts with registering for the government’s Age Pension, which is the main source of retirement income for Australians.

“One thing we see again and again is that people put off applying for the Age Pension, or only apply once they’ve become eligible,” she says.

“You can though, apply 13 weeks before you become eligible and it really makes sense to do that because it can take some time to get the application done, approved and set up.”

You could also contact your super fund or financial advisor to discuss your other sources of income and assets. This will help you plan for any admin that’s needed now or in the future.

Helen Baker adds that health care needs and costs are also important to consider and prepare for.

“Longer-term, the issue is health. What is usually spent on travel or projects transitions into health care and eventually aged care costs.”

The government’s My Aged Care website has details on the different support services and subsidies that are available for aged care services.

As The Australian Women’s Weekly has reported, it can start with something as simple as home maintenance support or meals on wheels.

Both the Age Pension and My Aged Care services are means tested based on your assets and income. So doing the paperwork as early as possible can make it easier to get support when you need it.

Estate planning

This is another important area of life admin to consider in retirement.

“As we get older, Power of Attorney and Health Care Directives have additional significance,” says Melisa Sloan, lawyer and author of Big Moments, a book with advice for major changes in life.

“It is crucial that you put these documents in place so that you appoint people who you would like to care for you and make decisions for you if you are no longer able to.”

She tells The Australian Women’s Weekly that people often put off this process when they’re unsure of how to factor different circumstances into their will.

“For instance, if you have a child with a dependency issue or a child who may experience a marriage breakdown or if you are yourself in a blended marriage.

“There are solutions and strategies for all these situations and with the right advice you will be able to put in place an estate plan that you feel comfortable with and one that will give you peace of mind,” she says.

It’s also important to discuss any shared assets and make sure you have set a Binding Death Nomination for your superannuation, as this is separate to your will.

You could even set up a “when I die” file to make it easier for your loved ones.

If you’re not sure where to start or have specific questions, Melisa suggests speaking to an estate lawyer.

“[They] will be able to chat with you about your current situation and advise you of the best strategies for you so that these can be incorporated into your estate planning documents.”

Estate planning is an important factor to consider both before and during retirement.

What is the average life span after retirement?

The average life span if you retire at the age 65 in Australia is 20.2 years for men and 22.8 years for women. This is based on analysis from the Australian Institute of Health and Welfare, which states men have a life expectancy of 85.2 years and women have a life expectancy of 87.8 years.

If you retire earlier or later than 65 years of age, you can just subtract your age from the life expectancy age to get an idea of how many years you’ll have in retirement.

It’s also worth keeping in mind that these life expectancy ages are averages. Some people can live well into their 90s and beyond.

Aware’s Jacki Ellis says considering your retirement life earlier, rather than later, helps make it more fulfilling.

“Retirement is often a 30-year period these days and once you move beyond your big bucket list holiday type activities, there is a need to build a new life. Those who plan their lifestyle choices actively tend to end up happiest.”

3. Review your assets and debts

As well as your super, assets could include your home, investment property, shares and savings or other investments.

Debt (or potential debt) could include mortgages, personal loans and credit cards. Paying these off before you retire helps you have more money for the things you want to do.

But Jacki says it’s important to start by becoming aware of all aspects of your finances.

“Just like everyday life before retirement, it helps to understand your relationship with money. And make sure you start to do some planning, wherever you are in your career or journey towards retirement,” she says.

“If you’re trying to balance competing goals, getting some advice might be really helpful for you. Having someone to work through a structured process to help you understand the trade-offs and think things through [which] can be really valuable.”

Melisa also says it’s important to consider the structure of different assets.

“You may individually own some assets, jointly own others and may even have trust or company assets,” she says, noting that different legal requirements apply to joint assets after death.

4. Consider your home and retirement living situation

Your living situation is also an important part of life in retirement.

“Owning a home and no longer having mortgage repayments does definitely help with life in retirement,” Jacki says.

“A common rule of thumb is you need around 70% of your pre-retirement income, because you typically pay less tax in retirement, no longer need to save for your retirement, and often debt expenses have become less of a burden by the time you reach retirement.

“If the mortgage has been paid, that’s a big expense that can really change spending habits.

Jacki Ellis, Aware Super’s Head of Retirement

But if you’re renting, she says you may need an income that’s closer to what you had before retirement.

“The good news is that retirement is often more affordable than people expect once they take into account any government Age Pension benefits they may be eligible for.”

If you’re considering aged care support, remember that there may be subsidies available for residential aged care. There are also retirement villages and private aged care facilities you could consider, although these are not typically subsidised by the government’s My Aged Care service.

But finding out about your options before you need to make any decisions can help you set up a financial plan that lets you enjoy life after retirement now and in the future.

Many retired people plan to spend more time with loved ones in their lives.

5. Think about what you want to do in retirement

“Retirement is a new, exciting chapter in your life. Time to do whatever you want, when you want,” says Helen Baker.

For many people, this means travel, new clubs, volunteering, spending time with family or starting new projects as a way of “resetting their life with fun things.”

“Obviously this comes with additional costs – lots of travel, renovating homes, taking on projects, buying that car that will see you through retirement,” she says.

Both Helen and Jacki say that many people also wonder if they will have enough money in retirement.

“Mostly we hear our members wishing they had engaged with their super and started retirement planning sooner. Often that’s wishing they had done more earlier to set themselves up financially for retirement, especially once they realise the power of compound interest – and that every little bit adds up, making big difference at retirement,” Jacki says.

She adds that the sooner you start this process, the more opportunity you have for “building in a budget for any one-off costs like exciting retirement dreams.”

“I highly recommend connecting with your super fund and seeking some guidance and advice, often at no extra cost,” she says.

“We’ve even seen people find ways to enjoy the legacy they want to leave by gifting some of it to their loved ones while they are still alive, once they are confident they can afford to do so and understand any implications for tax or their government benefits.”

*This article contains general advice only and may not be suitable for your circumstances. Make sure you seek financial advice appropriate to your individual circumstances before making decisions.

Related stories