It’s never too late to make savvy decisions about your retirement.
Retirement is an exciting time. It’s the long-awaited reward for a lifetime of work and, if you’ve planned it correctly, it heralds a life stage synonymous with relaxation and enjoyment. However, to make sure your retirement is everything you’d hoped for, it’s crucial to make smart decisions to help you stick to your financial plan, achieve investment goals and aid you in your transition.
If you’ve recently left the workforce or it’s in your near future, these five tips may help you secure a better and more comfortable retirement.
Understand your entitlements
Getting older has its upsides – there are certain benefits that come from being of retirement age.
Seniors over the age of 60 have access to cheaper public transport, health care and prescription medications by way of the Seniors Card and Pensioner Concession Card to help you live a more comfortable lifestyle. If you’re over the age of 66, you may also be eligible for the Age Pension1.
Free up some extra money
Having a little extra in the bank is always handy, especially when you’ve left the workforce. While there are a few ways you can free up some extra money, downsizing – or selling your current home to relocate to a smaller and cheaper one to access the equity – is one common option. Before you do that, however, you’ll need to make sure it’s the right move for you.
“My advice is always to crunch those numbers,” says Dianne Charman, managing director of Jade Financial Group.
“Remember all the extra costs of selling and buying your new place, such as stamp duty, legal costs, moving costs, rates and insurance. There is much to think about and taking the time to work through the financial side of things is very important.”
Selling lifestyle assets that you don’t use very often, such as a second car or a boat, can help build your cash flow.
Once you have access to a little more cash, where should you redirect it?
“Redeploying equity really comes down to what your priorities are,” says Charman. “Would it help to top up your savings accounts or investments? Check how you are travelling with your investment strategy and drawdown or, if you’re still accumulating, look at how an injection now, no matter how small you might think it is, will help over the long term.”
Charman also suggests taking a closer look at those long-term, lifelong goals that may have once seemed too lofty or out of reach.
“If you have everything covered off and you’re in a ‘windfall’ position with this extra equity, try to make the most of that and pursue what it is that would make you really happy. Seeing the Northern Lights, gifting a bursary at the local school, helping your loved ones in financial need or setting yourself up for that experience of a lifetime are all great options.”
Identify where you can save a little or a lot
Full retirement with no access to work essentially means your income is capped, so it’s even more crucial that you understand where your money is going and adjust accordingly. Minimising your expenses can make a big difference to your long-term security so consider freeing up extra money by reassessing your utilities or insurance bills. Shop around for cheaper providers and consider creating a budget to help you reach specific financial goals and save for unexpected expenses – this calculator can help.
Stay the course with your investment strategy
Although it’s not unusual for the market to fluctuate, it can be worrying to see your investments shift as much as they have in the wake of COVID-19 (coronavirus). But that doesn’t necessarily mean you should make any dramatic changes to your investment strategy.
“A well thought out investment strategy will set you up for all market events, including the unpredictability you may be feeling during this pandemic,” says Charman. “There is much to be said for holding firm on your strategy, particularly when you don’t want to crystallise any losses by shifting now.”
Many investments often involve some amount of risk and, pandemic or not, an important step to navigate potentially choppy waters is to regularly check in with your strategy and your financial adviser.
“Staying informed is the best course of action,” says Charman. “My advice is to keep in touch with your adviser. Investing is a long-term game so don’t get too distracted by all the noise or make changes based on short-term impacts that will recover with time.”
Stretch out your working life (if you can)
If you’re of retirement age, you might have already begun the process of winding down work. Considering the current climate, however, your hopes for retirement may have changed since you made that decision.
“There are benefits at the moment to stretching out your working life, particularly as there’s not much opportunity for those overseas bucket-list experiences,” Charman points out.
It doesn’t have to be a long-term solution but working for a little longer – even part-time – could help you pay down any outstanding debt or top up your super savings for retirement.
1 Australian Government, Services Australia: Age Pension
2 Australian Taxation Office: Beneficiary tax offset and seniors and pensioners tax offset calculator
3 Australian Government, Services Australia: Pension Loans Scheme
4 Australian Government, Services Australia: Advance payment
5 Australian Banking Association: Reducing fees
Investing is a long-term game, so regularly check in with your investment strategy. If you hold super with AMP, you can log into My AMP to see how it’s invested.
You might also like
The Work Test And Work Test Exemption Explained13 July 2021 | Grow my wealth If you’re aged 67 to 74 and want to make voluntary super contributions, you must meet a work test, unless you qualify for an exemption. See what you need to know. Read more
7 tips to reduce your debts before you retire05 May 2021 | Manage my money As your working life draws to a close, your social life and recreational activities don’t have to. If you’re a little anxious about money still owing, here are a few pointers. Read more
Transfer balance cap set to increase to $1.7 million23 February 2021 | Plan my future The amount of super savings that can be transferred into a tax-free pension account will increase from $1.6 million to $1.7 million on 1 July this year, but not for everyone. Read more
This information is provided by AWM Services Pty Ltd (ABN 15 139 353 496) and is general in nature only. It hasn’t taken your personal circumstances into account. Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant product disclosure statement or terms and conditions available from AMP at amp.com.au or by calling 131 267.
All information on this website is subject to change without notice. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability for any resulting loss or damage of the reader or any other person.
You can read our Financial Services Guide online for information about our services, including the fees and other benefits that AMP companies and their representatives may receive relating to products and services provided to you. You can also ask us for a hardcopy. AWM Services is a part of AMP group.