How to be a self-funded retiree and control your own destiny

Virtually anyone can self-fund a happy, comfortable retirement regardless of how much they have. The trick is ensuring your financial foundations are sound and you have a comprehensive plan that covers not just your monetary assets, but everything else that is reliant on them too.

Retirement is a time for family, leisure, travel and pursuing personal passions.

Self-funding your retirement, where you’re financially independent and in control, is the ultimate goal for most to achieve this dream life – but getting there requires careful planning and calculated action. 

Remember that quality of life is about more than just how many dollars and cents you have. Omitting any of the below from your retirement plan is a dangerous gamble with your golden years.

Finances

Self-funding retirement involves taking a holistic view of your finances to maximise your income and minimise the outgoings.

Consider the following and how they may (or may not) work for you:

  • Expenses: your everyday living costs will change once you’re no longer working full time.
  • Superannuation: maximising returns and only withdrawing what you really need. 
  • Part-pension: make super last longer by offsetting your income, if eligible.
  • Investment returns: share dividends, rental income, asset sales.
  • Part-time employment: ease into retirement gradually and maximise paid earnings.
  • Self-employment: start that side hustle or passion project to generate income.
  • Tax: minimise bills and claim your full deductions and entitlements.

Housing

Where you live has a huge bearing on your quality of life in retirement. 

For instance, home ownership offers far greater stability, both financial and logistical, while renting eats into your retirement income.

Downsizing from the family home may unlock substantial equity, reduce maintenance costs and let you boost your super balance.

A tree or sea change may seem nice at first, but you could experience restricted access to healthcare, services, entertainment and family.

Cohabiting with adult children offers a means for both families to cut housing costs but comes with its own risks.

Consider your options carefully and don’t act on impulse.

Contingencies

What if you or your partner suffer from ill health? You lose money in a scam? Your relationship breaks down? Your superannuation balance plummets in a market crash? Fire, storm or flood destroys your home? You, or your partner, die prematurely?

They aren’t nice to think about, but sticking your head in the sand and hoping for the best isn’t wise. 

By all means hope for the best, but have contingencies and protections in place that limit the damage should the worst happen, including:

  • Insurances: up-to-date policies, adequate coverage, right-sized costs
  • Diversified investments: spread your risk
  • Estate planning: put your wishes in writing and keep them current as circumstances change
  • Emergency fund: accessible cash in a hurry

Health

Healthcare needs multiply as we get older, and healthcare cards don’t cover everything. 

As a self-funded retiree, your government assistance and discounts may be limited. Or you may need to pay as a private patient to avoid lengthy waits in the public system.

Plus, private health cover may be impossible to get post-retirement.

Health-related expenses may include:

  • out-of-pocket costs for doctors, medications, dental and eyewear.
  • renovations to improve access (ramps, widened doorways, bathroom handles etc.)
  • preventative treatments (dietary supplements, physiotherapies)
  • assisted care
  • a more accessible vehicle.

As such, it is useful to budget in additional money for your healthcare needs. 

Relationships

Retirement can change relationship dynamics, especially for couples where one partner retires before the other. If left unchecked, the relationship could sour irretrievably – and divorce doesn’t come cheap.

Then are the potential impacts on your ability to self-fund your retirement if, for example, you support adult children into the housing market. Unmet repayments or bank foreclosure on a loan guarantee could leave you destitute. Or you could inadvertently leave yourself without enough money to live comfortably.

Blended families and second marriages/de facto partnerships can also complicate matters. A notable example is where one partner dies and leaves their home to their children, potentially rendering their partner homeless.

Good communication and written documentation go a long way to keeping everyone happy.

Good advice

Self-funding your retirement shouldn’t mean self-designing your retirement plan. 

Just like you seek reputable doctors for your health and lawyers for legal matters, professional tax and financial advice will help you avoid common mistakes and embrace relevant opportunities to save and make money.

You’ve worked and saved your whole life to this point – don’t squander that effort and risk your retirement now by relying on gossip and unqualified self-proclaimed experts!

Have you taken steps to self-fund your retirement? What strategies have worked for you? Let us know in the comments section below.

Also read: How to develop your best transition to retirement plan

Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1 per cent of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and childrenFind out more at www.onyourowntwofeet.com.au

Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754.

9 COMMENTS

  1. Aged care homes who were the architects of the social engineering policy of Self funded retirees suffering elder abuse by paying a dis proportion of Aged care fees will now be expecting a priority service for their loved one.
    They don’t mind paying more but they want the service they pay for.
    They want value for money and a say in how it’s spent especially in regard to their loved one.
    When they find out the money is pooled by the provider and doesn’t follow the person who the Govt pay the provider to service as their health deteriorates they will be very unhappy.
    I wonder if the$25000 palliative care package applies in Agedcare!

  2. Helen, thanks for your article.
    My Financial adviser is a good person
    However recently he dropped a bombshell that I have an untaxed Superannuation balance which ,as I have no dependants will attract an inheritance tax of 15% to be paid by my estate.
    As I am 78 I am over 75 and I can’t do much about it other than withdraw the balance prior to death and bank it.
    HOWEVER I NEED AN ESTATE PLANNER AND A TAX CONSULTANT!?
    I am still working my way through the situation.
    Getting old brings the unknown to one’s doorstep.
    Cheers

    • Hi Hammo, A lot would depend on your superannuation balance and other investments outside of superannuation. It is assumed at your age that you are receiving an tax free Account-Based Pension (or Allocated Pension) from your superannuation fund.
      If your investments outside of superannuation are substantial then it is in your interests to continue with the ABP for as long as possible as it is, currently, tax free to you.
      If the investments are not substantial and closing the superannuation fund and transferring the assets to yourself and investing them yourself or with your financial planner then this may be an option for you, depending on your tax situation.
      Your financial planner should be able to advise you as they are aware of the tax consequences of either situation.

  3. “private health cover may be impossible to get post-retirement”
    The other thing that is nearly impossible to get post-retirement is a credit card.
    I have been attached to my husband’s credit card for decades when I read an article that it can be difficult to get a credit card once you are retired. There is a 10 year difference in age between us too.
    Well, it was! I eventually succeeded at 74 by accusing the provider of age discrimination.

    • There is serious age discrimination happening in the financial world in this country. Older people struggle to get a credit card, and it’s almost impossible to get a short-term loan to buy a home prior to selling your existing home if you want to downsize in retirement, no matter what assets you have or how well you can evidence capacity to pay and ability to manage money efficiently.

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