Retirement may be just around the corner, but are you prepared? Here’s tips on how to make your move out of the workforce a smooth one.
- Retirement may be around the corner but that doesn’t mean you should stop your budgeting and savings plans.
- Did you know there are a number of discounts you may be eligible for from the Federal Government once you reach retirement?
- Downsizing is one way to pay off debt, reduce bills and save time.
- Now is the time to maximise your passive income streams.
- When your super payments end, will your life insurance? Make sure you’re fully aware of your cover details.
According to the Australian Bureau of Statistics, of the Aussies who are planning their retirement, the average age they intend to retire is 65.5 years1. But just because you’re getting close to intended retirement age, doesn’t mean you should stop being proactive about building your nest egg.
The COVID pandemic has had an impact on many people’s income and, while helpful at the time, the government’s early release of super scheme has also set back many super balances. If that’s you, you may want to consider making some tweaks to your retirement plans. Pushing back your retirement date may give you time to recoup any losses you may have faced.
Alternatively, you might decide to follow through with your plans, and accept that your retirement income might be smaller. No matter which approach you choose, keeping an open mind and a flexible approach can make it easier to adapt to economic uncertainty.
Read on for other tips on how to save for the retirement lifestyle you want in your 60s, when leaving the workforce is just around the corner.
Have a financial plan for your dream retirement
Many people love what they do and may not be looking forward to the prospect of walking away from full-time work. Others might be counting down the minutes until they can leave the office behind or be keen to scale back to part-time hours. Regardless of which category you fall into, as you start planning for retirement more seriously, now is the time to start picturing what your dream retirement will look like.
Do you want to stay active, take up new hobbies, travel the world or pick up that project you’ve been delaying for years? And just how much will all that cost? You’ve probably already calculated how much you’ll need to live comfortably in retirement, but it doesn’t hurt to remind yourself using our retirement calculator.
You can also use this time to turn your skills and hobbies – such as consulting or mentoring others – into additional retirement income. Whether you’re looking for part-time work or a hobby that brings in a little extra, why not get creative, keep busy, make new friends and earn extra cash on the side, all at the same time?
Learn to live more frugally
Just because retirement is in your sights doesn’t mean you no longer need a retirement budget – in fact, retirement planning becomes essential in your final years in the workforce. To make sure your retirement savings are sufficiently healthy to support you through the rest of your life, it’s a good idea to revisit your budget and look at all the extra ways you can cut back on spending to give your finances a final boost.
It's also a good idea to stay on top of all the financial perks you might be eligible for from the Federal Government in your 60s, look into a Seniors Card offering discounts on public transport, a Commonwealth Seniors Health Card providing cheaper health care, rent assistance, energy supplements or a carer allowance.
Tip: A Pensioner Concession Card could give you access to cheaper healthcare, medicines and other discounts.
Now that you’re less likely to have dependants living with you, consider downsizing into an apartment or a smaller home – you’ll save money (reduced utility bills) and time (less space to clean). Think about selling furniture and other objects that you no longer need, including big-ticket items like a second car. Tightening your belt on the big things means you’ll still be able to afford the luxuries you’ve been counting on enjoying in retirement.
Fine-tune your passive income in retirement
Having a passive income stream – that is, income you earn from an investment, such as property or shares, rather than income you earn by working – is a great way to maintain your finances when you’re no longer in full-time employment.
Start by working out what style of investor you are, and then consider the type of portfolio that will best match your risk tolerance and the number of years you have left in the workforce. Talk to a financial adviser if you need more guidance on how to structure your investments.
Set up an emergency fund
Unexpected costs arise at all stages of life, whether related to your property or your health. In fact, recent research estimates that an Australian couple will spend between $4,975 and $9,900 a year on healthcare in retirement2.
When you no longer have a steady income stream, dealing with these potentially hefty expenses can mean dipping into your savings. To avoid this, set up an emergency fund to cover any unplanned bills. Based on the average healthcare amounts mentioned above, you should be budgeting around $440 a month for an individual or, for a couple, $825 a month.
TIP: While interest rates on cash are not always as high as other investments, one way to maximise your returns for your emergency fund is through compound interest.
Stay insured when you stop working
Almost 10 million Australians with life insurance hold it through their superannuation3. But in many cases, this ends when you turn 65. If you haven’t taken out separate life insurance, you may want to do it before you stop working.
The purpose of this type of insurance is to provide you and your family with financial security if you were to pass-away or become terminally ill. Your premiums will be higher in your 60s, but you’ll have financial peace of mind knowing that things like living expenses will be taken care of if something happens to you.
Given the high medical costs you may face in retirement, it’s also important to make sure your private health insurance is still in place when you leave full-time employment. Consider switching to a policy that’s tailored to the specific needs of your age group.
Start picturing what a comfortable retirement looks like to you, so you can emotionally and financially prepare for the future.
Revisit your budget to check that your retirement savings are healthy, reassess your investment portfolio, and put extra money into an emergency fund.
Give yourself financial peace of mind by considering health and life insurances that are tailored to the specific needs of your age group.
According to the research…
the average intended retirement age in Australia4
the annual cost of healthcare for a retired Australian couple5
the number of Australians with life insurance hold it through their superannuation6
Complimentary Retirement Health Check
How to save for retirement in your 30s29 October 2021 | Retirement Immediate changes and expenses may be front-of-mind, but financial decisions you make now can have long-term effects. Here’s how to save for retirement in your 30s. Read more
How to save for retirement in your 40s29 October 2021 | Retirement It’s not too late to make savings decisions that will have a big impact on your future financial wellbeing. Here’s how to save for retirement in your 40s. Read more
How to save for retirement in your 50s29 October 2021 | Retirement Boost your retirement savings and maximise your financial wellbeing when you say goodbye to the workforce. Learn how to save for retirement in your 50s. Read more
Tools & calculators
What you need to know
Any advice and information is provided by AWM Services Pty Ltd ABN 15 139 353 496, AFSL No. 366121 (AWM Services) and is general in nature. It hasn’t taken your financial or personal circumstances into account.
It’s important to consider your particular circumstances and read the relevant product disclosure statement, Target Market Determination and terms and conditions, available from AMP at amp.com.au, or by calling 131 267, before deciding what’s right for you.
The retirement health check is a general advice conversation only. It is provided by AWM Services Limited (AWM Services) ABN 15 139 353 496, AFS Licence No. 366121 (AWMS) to eligible members of the AMP Super Fund. AWM Services is a wholly-owned subsidiary of AMP.
You can read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. You can also ask us for a hard copy. All information on this website is subject to change without notice. AWM Services is part of the AMP group.