Retirement Planning

A Complete Retirement Planning Framework 

Retirement planning isn’t always something that is front of mind for people in their forties and early fifties. Sometimes there appear to be far more immediate issues that need to be dealt with. However, there is no doubt that planning early will reduce the possibility that you will not be able to retire with a large enough retirement ‘nest egg’. If you’re not able to retire with enough funds then you may have to put off retirement until you are in better financial standing.

Some early planning for the retirement phase of your life will give you the best possible chance of being able to take that exciting step. Yes, we said it. Retirement should be exciting!

Our advisers work with a large number of retirement planning clients. Based on the experience of our advisers here at Financial Framework, we have put together a short guide on some of the most commonly asked questions about retirement planning.

The most obvious one those planning retirement ask is “When Can I Retire?” It’s a great question, so let’s kick things off with when you can retire.

When Can I Retire?

The answer is… anytime you want! The reality is a little more complicated.

The vast majority of people will have to wait until they can either access their superannuation or be entitled to the aged pension.

In order to access your superannuation, you need to have reached your preservation age. This age is gradually increasing depending on when you were born. For people born between the 1st of July 1961 and the 30th of June 1962, their preservation age is 57 and anyone born after the 1st of July 1964 will have to wait until they turn 60, if you continue to work past your preservation age you are not able to access your superannuation until you are 65.

The eligibility for the aged pension is also graduated depending on your age. People born prior to the 31st of December 1952 are entitled to the pension now, however if you were born after the 1st of January 1957 you will have to wait until aged 67.

How Much Income Will I Need In Retirement?

This is probably the toughest question to answer, and while it is never a once size fits all situation, the Association of Superannuation Funds of Australia (AFSA) provides some retirement standard benchmarks.

AFSA has calculated the following retirement asset values and retirement incomes needed for a comfortable retirement. These figures should be taken on board with a pinch of salt as they consider a comfortable retirement for a couple and a single, assuming that they own their own home and are debt free.

AFSA indicated that a couple needs approximately $640,000 in superannuation and a single person needs $545,000.

In terms of income, a couple will need approximately $60,457 per year, whereas a single person would need $44,011 per year.

These figures might be ideal for some, but they certainly aren’t a guide for everyone. Perhaps a good indication would be the holiday allowance calculated for a couple on a weekly basis. ASFA allows for around $134 per week or $6,968 per annum to travel domestically and abroad. Considering that international flights can vary anywhere from a few hundred dollars to a couple of thousand dollars, this may suck up the majority of your travel budget. So, if you’re seeking to travel more often in retirement then you may want to increase your nest egg and your income to allow for that.

How Do I Look After My Health In Retirement?

Something that many people approaching retirement don’t often consider is their health.

Good health will have a major impact on your satisfaction with life in retirement. A focus on health will allow you to enjoy life fully in your later years. Just like you would make a retirement plan regarding your finances you should also make a health plan.

Now is the time to build the habit of exercising and eating right so you can add more years to your life and more life to your years. Get regular check-ups and screenings so that any problems can get caught early enough to do something about them. Take care of your health now so that you can enjoy a a long and full retirement.