With most Australians now living much longer and stronger we will all probably spend more time after full-time work, getting a new life! This is a stage which was previously called retirement. There are no magic new names for the post-work stage, but it’s definitely not the old-style retirement of cardigan and slippers.
The Retirement section of YOURLifeChoices website has been organised into ten main categories to help you plan and enjoy this special time of life. We all value our independence very highly and the best way to maintain independence is through good health and a firm financial footing which will deliver maximum choice as we age.
We’ve brought together the best brains in the business to answer your questions on making your super work for you, making the most of your income in retirement and the legal matters which count in our new, quarterly Retirement Update.
Critical points to consider when retirement planning are timing, your emotional readiness, how much (money) is enough, and maximising your nest egg with an effective transition to retirement. Read on to discover the five key ingredients for a fulfilling retirement or click on one of the links to explore retirement income, pension and wealth management options.
1. Start retirement planning today
Please forgive our lack of modesty, but YOURLifeChoices website Googles first on the term ‘retirement planning’. This is because it is a subject we write about each and every week. So start your retirement planning by reading our brief article on the things you need to consider, then do the Are you ready to retire? quiz to check where you are at and, more importantly, where you need to be.
2. Understanding Transition to Retirement (TTR)
The transition to retirement is an emotional stage, but it is also a specific financial option which enables you to access your superannuation savings BEFORE you reach the official retirement age.
If you want to reduce your working hours but not your income this can be an excellent way of maximising your income. Those who have reached a certain age (called preservation age) can do this, topping up part-time income with income from superannuation. It’s called Transition to Retirement (TTR) and here we explain how it works.
3. Who needs a financial planner?
Most Australians pay fees to solicitors for property settlement. Yet far fewer believe the fees charged by financial planners are worth the result. Are they right? Louise Biti discusses whether the services of a planner are worth the fee. ASIC has also produced a great new book called ‘Getting Advice’ to help you better understand the issues concerned with retirement finances and what you can expect from a planner.
4. Online retirement planning calculators
For the Wednesday List we tested a few calculators and found that the Commonwealth Financial Planning “How much Super is enough?” was the quickest and easiest to use. You are asked to enter just seven pieces of information and then the calculator tells you if your super will last for the average expected life span for your gender. You can then print out this graph, with inputs, and share with a financial professional to work out how to maximise your income potential.
Test some other calculators here.
5. One-stop retirement income shop
The NICRI or, to use its full name, National Information Centre on Retirement Investments website is one of our favourites. Here you will find objective and relevant information and calculators to help with your investment concerns. In particular the ‘moneymap’ walks you through six easy steps to understanding possible income, assessing your assets and making wise investment decisions. And if all else fails you can speak to a real person on the nation-wide toll free telephone service 1800 020 110.
6. Will you get a pension in retirement?
Despite the fact that almost 70 per cent of older Australians will receive a full or part Age Pension, very few pre-retirees have a clue how Centrelink will assess their income and assets. Again, when you know where to look, it becomes much easier and this link to the Centrelink ‘About to retire or in retirement’ booklet explains exactly how the process of assessment works. And if you prefer to read the relevant information on the Centrelink site, try this link.
7. Managing your money in retirement
Once in retirement, how do you manage your money?
The first step to managing your money well is understanding how money actually works and then ways of minimising risk and charges. Two sites which we like are Ninemsn which draws on content from Money magazine and, once again, MONEYSMART site, in particular the section for over-55s.
8. Do retirees get discounts
The answer is yes and no. There are few discounts for people simply because they no longer work full-time. But there are a range of concessions, entitlements and discounts which apply for people aged over 60 and/or who are transitioning to retirement. These include state seniors cards, the Commonwealth Seniors Health Card and some international concession cards – Debbie has sorted through the detail and shares an overview of concession cards and which may apply to you. There are also many privately operated discount schemes for those who are eligible for none of the above. And many retailers and service providers will honour a seniors discount for those aged 60 and over, simply by seeing proof of age. If you don’t ask, you won’t know.
9. Is retirement village living the answer?
Only about six per cent of Australians currently live in a retirement village. New developments have upped the ante with features such as golf courses, fitness centres, cafes and hobby areas. So how do you decide whether to stick with the family home, or take the plunge and buy into what seems to be an affordable, low maintenance and extremely social lifestyle? In February 2011, research conducted by consumer advocacy group, CHOICE indicated that many residents can become disappointed with their decision to move to a village.
Each State and Territory has (different) specific legislation which regulates the operation of retirement villages, which makes objective comparisons difficult.
So we think the official Federal Government’s seniors site is the most objective and reliable for an explanation of the pros and cons of moving to a village.
The Department of Families, Housing, Community services and Indigenous Affairs also publishes a terrific guide to a wide range of accommodation options for older Australians – you can download it here.
10. Is a reverse mortgage for you?
A reverse mortgage is a special type of loan which allows you to borrow money against the equity in your home. Some retirees may see this as a lifeline – a timely injection of funds for the cash-poor, asset rich. But as with all forms of home finance, these loans should be treated with great caution. The Australian Government’s MONEYSMART website offers an excellent definition of reverse mortgages and an even better summary of what you need to know before you sign on the dotted line.
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