What does your retirement dream look like – spending time on your hobbies? Seeing the grandkids more often? Maybe pursuing a passion, or travelling?
According to AMP financial adviser John Dani, the people who are most content and happy in retirement all have this one thing in common - a well-defined purpose for their golden years. Mr Dani’s worked with hundreds of people over the last couple of decades, and having something to focus on is what makes them feel they’ve achieved their retirement dream.
Having a purpose is key
Retirement can take some getting used. Going from full or part-time work to suddenly having nowhere to be is a big adjustment for many people, even though it’s usually a very welcome one!
Mr Dani believes creating goals that will provide a sense of achievement and progress helps to keep the energy up and boredom at bay.
Some things to consider are:
- focusing on an existing interest or pastime
- devoting more time to your favourite activity
- joining a group that shares your interests, whether it be baking or bowling
- volunteering for a charity or community group
- undertaking a course of study
- learning a new skill.
“Even for travel (when it’s available again) think about how purpose can be incorporated. For example, increasingly, clients travel specifically to research their family history. Others incorporate environmental activities.”
His biggest tip? Consider a ‘trial retirement’. Taking extended time off work for three to six months to experiment with how you may fill your time in retirement can help cement whether you’re ready to retire.
Plan for financial peace of mind
No-one wants to retire worried about how they’ll cope financially. Mr Dani says it’s important to make sure you’ve worked out a sensible retirement income you can live off.
While every person’s retirement expectations are different, he suggests some figures according to the Association of Superannuation Funds of Australia1. “Some good rules of thumb are useful here. For a couple, a comfortable retirement is just over $60,000 a year, and for a single person, it is about $45,000 a year.”
Remember, everyone’s needs are different. The first step is understanding how much you need to pursue your purposeful retirement. Then you might work towards building retirement savings within super and outside of super to meet your retirement living needs.
Aim to be debt free
The other essential thing Mr Dani suggests is that if you’re still 10-15 years away from retirement, focus on becoming debt free.
“More people than ever before are retiring in Australia with money still owing on their mortgage2. I believe that being debt free is crucial to making retirement dreams come true.”
John Dani, AMP financial adviser
“The last thing you want to be concerned about in retirement is making home loan repayments and changes to interest rates. Being debt free, and in particular making sure the mortgage is paid off, provides a sense of relief and financial freedom that can make all the difference to your retirement.”
Mr Dani says it’s wise to consider getting a financial adviser ahead of retirement. But make it clear to the adviser what you want to achieve.
“The more specific you are about what’s important to you, the more fruitful the process will be. Let me give an example. If someone was to meet with me and say, ‘I want to retire pretty soon. Can you help me?’ I can’t do much with that because it’s too vague. And we will need to spend a lot of time to understand what they really want.
Instead, if a person says ‘I hope to retire when I am 62, and I want $50,000 per year’ then this makes the process much easier and more engaging because now we have something clear that we can immediately start exploring.”
Tips for getting the most out of working with a financial adviser:
- Know what you want to achieve before or during retirement.
- Be clear on what your goals are ahead of your meeting.
- Choose three to four top goals.
- Be prepared to have a conversation and explore what’s important to you.
With some purpose and planning, you can work to make your retirement dreams a reality.
2 ABS, Microdata: Income and Housing, Australia, 2013-14
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The opinions expressed by the individual quoted in this article are their own and don’t necessarily reflect those of AMP.
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