Are you planning to retire soon? Do you know all you need to know about when, where and how to retire? If you’re an avid reader of YourLifeChoices content, you’re already ahead of the curve when it comes to planning retirement. But if you had to boil it down to four questions, these are the ones you should be asking and answering yourself.
Location: Where do I want to retire?
You’ll probably want to stay near family, friends, community, activities, healthcare and medical facilities, and consider rates, taxes (property and income taxes) and your cost of living.
Do you want to be near the beach or in the mountains? City or country? Rural or regional? No-one can answer these questions for you – it is far too subjective. But if you can tick off most of the aforementioned considerations, you’re either in or have found the ideal place to retire.
Healthcare: How will I pay for it?
You may feel as if you’re in great physical condition right now, but one issue that creeps up on many retirees is the high cost of healthcare. It can come out of nowhere, and unless you’re prepared for it financially, it can ruin your retirement.
Medicare only covers you for so much. As does private health cover – if you can afford it.
According to the Productivity Commission’s 2005 report, Economic Implications of an Ageing Australia: “Across all health expenditure types, expenditure on those agedover 65 is around four times higher than expenditure on those under 65 and rises to between six to nine times higher for the oldest groups.”
So, whatever you’re spending on healthcare now will quadruple when you’re 65 and will increase every year after that. Are you prepared for it?
Work and social: How active should I be?
So many Australians are working far later in life. In fact, one in five Australians aged over 70 are still working in some form. The benefits of working longer aren’t just financial. The social impact of working longer is just as, if not more, beneficial.
Sure, having some form of income gives you more flexibility in retirement. Saving for a holiday, being able to eat out every so often, having money for social occasions or even just being able to squirrel some away for a rainy day or emergency gives you peace of mind. One of the first big stresses in retirement is watching the money stop flowing in.
Working in some capacity allays this stress, and also keeps you involved socially, giving you a sense of purpose you’ll most likely miss if you stop working altogether. If you have enough money, you may consider volunteering or just helping out around your community.
Money: How will you plug the retirement income leak?
The answer to this question will largely depend on how you answer the first three questions. To help you gain a better insight into this question, create a range of retirement scenarios that include income, expenses, taxes, concessions, healthcare, aged care, housing, security and social life. What do you want from retirement? Are you going to be able to deal with a worst case scenario? Do you plan on fully retiring? Can you handle not receiving a steady income?
According to Forbes contributor Stephen Chen, money is the last thing you should be thinking about. However, if you trust your bank manager or financial adviser, sit with them and discuss your concerns. You can also speak with a Centrelink Financial Information Services officer for help with planning the income side of retirement.
What four questions do you think you should ask when planning retirement?
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