Retirement30 October 2017

The risks facing retirees

Emma
Emma
Author

As you edge closer to retirement, anxiety can set in as you ponder questions you’d never considered earlier in your working life.

How much will I need and how will I achieve it? When can I retire? How long will my super last? What about inflation? Could a market crash wipe out my retirement savings? What will I do with all my spare time? But with careful consideration, you can sleep easier knowing you’ve prepared as much as you can to get you through any unexpected twists and turns.

How much will I need and how will I achieve it?

Working out how much you need to support yourself in retirement will depend on the type of post-work lifestyle you’re planning. If you don’t know where to begin, then a good place to start can be the Association of Superannuation Funds of Australia’s (ASFA) Retirement Standard. It benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in their post-work years. It also shows the super balances required to achieve these standards of living. Of course, your standard of living may not fall within these categories.

As you’re approaching retirement, it’s a good idea to talk with us about reviewing your options for achieving the balance you require for retirement.

You can also look on our website for ways to boost your super and even check to see if you’re on track by visiting our Retirement $ projector.

When can I retire?

Theoretically, you can retire whenever you like. When you can access your super is another matter entirely.

You can usually access your super:

  • when you turn 65
  • when you reach preservation age and retire or
  • under the transition to retirement rules, while continuing to work.

Preservation age depends on when you were born.

Retiree risks graphics graphic LR

How long will my money last?

Between 2015-17 the average life expectancy of Tasmanians at birth was determined to be 78.7 years for males and 82.9 years for females1. Many retirees use these figures to plan how long their money may last, but with a healthy lifestyle and some good luck, it’s entirely possible to live well beyond these expectancies.

Our Retirement $ projector can show you how long your super may last.

Could a market crash wipe out my retirement savings?

The mere thought of amassing a healthy super balance only to have it wiped out by a dive in the share market on the eve of your retirement party is enough to scare anyone out of believing in super.

The key to reducing this risk is to select an investment option which is right for your stage of life. As you near retirement, having an investment strategy with a lower level of expected risk and return may be a sensible move.

What about inflation?

The increased cost of living is inevitable and it’s important to factor this into your budget. For peace of mind, it can be useful to have a plan in place for if inflation increases to a point where you couldn’t afford the lifestyle you originally budgeted for. Look at discretionary expenses you could give up if needed, e.g. weekly dinners out, movies, short trips.

What about super rules changing?

With changes in government comes changes to legislation. This can sometimes represent uncertainty for retirees and pre-retirees, but should be a reminder to regularly review your financial plan to ensure appropriate strategies are in place.

It may be a good opportunity to search for any lost super and consider rolling it in to your Tasplan account to save on administration fees and maximise your returns.

What will I do with all of my spare time?

Retirement planning tends to focus on the financial side of things. Meanwhile the more simple concerns, such as how we’re going to fill in our days, seem to get left by the wayside. For many people, work comes to define them, providing not only an income but also a sense of purpose. When work isn’t there anymore, it can leave a gaping void.

Just because you don't have to work anymore, doesn’t mean you have to give it up entirely. You could study something you’ve always been curious about, do some voluntary work, use the skills you’ve developed over your career to mentor others, or take a job you always wanted to do but thought it didn't pay enough to get by on.

The important thing is that you are happy. And for you, that could mean spending your days pottering about and taking each day as it comes. But for others, it may mean creating more structure and meaning around your days.

1 https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/3302.0.55.001Main%20Features22015-2017?opendocument&tabname=Summary&prodno=3302.0.55.001&issue=2015-2017&num=&view= Accessed 6 May 2019

This article contains information or advice that is intended to be general in nature and which was prepared without taking into account your personal objectives, financial situation or needs. Because of that, before acting on any information or advice in this article, please consider whether it is appropriate to your personal circumstances, talk to a financial planner and consider the Member guide, available at tasplan.com.au or by calling 1800 005 166, before making a decision about whether to acquire the products.

The trustee of Tasplan Super (ABN 14 602 032 302) is Tasplan Pty Ltd (ABN 13 009 563 062). AFSL 235391.

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