If retirement is something you are starting to think about, now is the time to put a plan together to ensure that you achieve the satisfying and meaningful retirement that you aspire to.
While the most enticing aspect of entering into retirement is the prospect of being free to do as you wish, it can be challenging to adjust to all that free time and to navigate the changes associated with leaving the workforce. It’s important that your retirement planning ensures you continue to fill your days with activities that give your life meaning and make you feel valued.
Maybe you have always wanted to pursue a certain hobby and never had the time. Whether it’s learning a language, picking up an instrument or unleashing your creative side, retirement can be the time to pursue your passions.
The other thing to remember is that you have a wealth of knowledge in your field, and it can be very satisfying to pay that forward. Why not consider volunteering a few days a week at an organization that might be in desperate need of your skillset or mentoring someone who is just starting out.
Staying active
As you enter into retirement it’s important to keep in mind that old adage ‘move it or lose it’. In fact, by some estimates, lack of physical activity may be the cause of about half of the physical decline associated with ageing.i Aim to choose exercises that maintain muscle mass and flexibility as well as finding time a few times a week to get your heart rate up. Consider riding, swimming, strength training, yoga or even working on your golf game as good options.
Practical Considerations
Retirement often entails some big changes. Some people like to downsize, others seek a move away from the city’s hustle and bustle. In planning your next move, make sure that the area is adequately facilitated for your needs. Consider, for example, the proximity to medical services and importantly the rest of your family.
Funding your lifestyle
Everyone will have different aspirations when they retire. For some it will mean being able to travel and see the world. For others it will be enjoying time with the grandkids or pursuing projects they have always wanted to tackle. Whatever your goals, you want to be sure you have enough superannuation to fund the lifestyle you aspire to.
It might be worth considering a gradual approach to ease into retirement. Rather than leaving the workforce altogether, you may be able to reduce the hours you work. That way you still have some income coming in, and a staged approach to retirement can also help with the mental adjustment to leaving the daily grind behind.
Transition to retirement as a strategy
A ‘transition to retirement’ (TTR) income stream is a type of pension that allows you to access your super while you are still working. The idea is that as you wind back your hours, you subsidize your decreased earnings with a portion of your super.
To do this, you must have reached preservation age, between 55-60 depending on when you were born, and have started a super account-based pension.
The table below will assist you in working out your preservation age.
| Date of birth | Preservation age |
| Before 1 July 1960 | 55 |
| 1 July 1960 – 30 June 1961 | 56 |
| 1 July 1961 – 30 June 1962 | 57 |
| 1 July 1962 – 30 June 1963 | 58 |
| 1 July 1963 – 30 June 1964 | 59 |
| 1 July 1964 and onwards | 60 |
If you are younger than 65, you can draw down a pension income between 4% to 10% from your TTR account balance each year. You cannot withdraw a lump sum. When you are ready to stop work all together you can roll your TTR pension back into your super account.ii
While TTR pensions can help increase your flexibility and may have tax benefits while you’re still working, they do involve drawing on your retirement savings, therefore leaving less for when you retire. Further, they may not be beneficial in all circumstances, are subject to restrictions and can be complex, so it is best to speak with an adviser before making a decision.
Having a plan for how you ease into retirement is more important than ever. If you need help creating one, come have a chat with us to discuss your options.
