Ensure you have enough super to retire
Retirement Planning is about ensuring you have adequate funds to live the retirement lifestyle you want and deserve. It’s one of life’s biggest events and we need to start preparing for it early on.
The best way to ensure you are ready to financially retire is to have a plan in place on how to get there and importantly, knowing when you can retire.
This means considering the following questions:
What age is best for me to retire on?
The retirement age in Australia isn’t set in stone. You can retire whenever you want to, but your health, financial situation, employment opportunities, individual preferences, superannuation plans and partner’s needs could play a big part.
Will you have enough to retire when you want?
Saving for retirement can help you prepare financially for the future. Industry figures show that individuals and couples around age 65 who are looking to retire today need an annual budget of $43,317 and $60,977 respectively to fund a comfortable lifestyle (assuming they own their home outright and are in relatively good health).
To live a modest lifestyle in retirement, which is considered better than living on the age pension, an individual would need an annual budget of $27,648, and a couple an annual budget of $39,7753.
These figures are helpful when thinking of retirement planning strategies. Think about how you want to live your life in retirement and add up any potential income sources you may have to support yourself. This could include things such as a superannuation fund, government entitlements, investments, savings or an expected inheritance.
When can I access my Super?
Your superannuation plan can make a big difference to your financial planning for retirement, so it’s handy to have an idea of when you can (and will) access your super.
Generally, you can start accessing super when you reach your preservation age, which will be between 55 and 60, depending on when you were born. As for what you do with your super – which from age 60 is typically accessible tax free – you’ll have a few options.
If you want more financial flexibility, you could access a portion of your super balance via a transition to retirement pension (TTR), while continuing to work full-time, part-time or casually.
Alternatively, if you want to retire, you can choose to take your super as a lump sum, or move it into an account-based pension or annuity, if you want a regular income stream. There will be different tax implications for different people, and your super doesn’t guarantee an income for life, so it can be valuable to seek professional advice on superannuation.
What are the best ways to grow your Super in the lead up to your retirement
Growing your super before you reach your retirement age is a great way to build upon your total retirement savings plan.
You can grow your super by making both before tax (known as salary sacrifice) and after tax contributions (known as non-concessional) contributions. Both styles of contributions can save you tax and help grow your super balance.
Investment preferences are part of many retirement planning strategies, and when you’re retiring, it’s worth reviewing your investment style and the options you’ve chosen. Whatever your goals and future plans happen to be, remember that even a little bit of planning today could go a long way tomorrow