What is Retirement Planning
Technically it’s making plans for your retirement but as with retirement, there is a whole industry around planning for retirement. So what is involved and what exactly is retirement planning?
In our own minds we have an idea of what we want our retirement to look like. We have our superannuation and retirement accounts set up and basically set and forget them. But we should take the time to check that these are performing well enough to get us to where we want to go. If on review they fall short of our expectations, this is where some planning comes in and what we need to do to make our financial retirement goals.
So what is the professional view of retirement planning? From one industry super fund, their recommendation is
- Making extra contributions to build your super while you’re still working
- Taking advantage of transition to retirement if you’re able to access your super but you want to ease off from full-time work without giving up work completely.
- Using a retirement balance projector to look at the effects of making additional super contributions and/or your planned retirement age.
- Investigating how best to use an investment property – if you’re thinking of selling, it may help your tax to sell after you retire.
- Working out how your super and the Australian Government Age Pension can work together. This can be particularly beneficial if you have less than $100,000 in your super for retirement.
So retirement planning really seems to incorporate just undertaking your retirement savings plan, rather than actually planning for your retirement in terms of how and where you will live, what your expenses are likely to be, and the type of lifestyle you envisage for yourself.
Financial planners are all over this area, encouraging you to ‘make a plan’ or ‘savings and investment strategies’ to get to your retirement goals (financial). This is prudent in your earlier life to make a plan of course, and in your fifties it’s pretty much imperative that you check that the plan you put in place is actually successful and achieving those goals.
What how can you save and work out a financial plan without working out a lifestyle plan? So I want to turn the conversation into planning for retirement in terms of day-to-day life and your overall lifestyle you want for your retirement.
What type of housing do you want? Do you want to join a retirement community? Sell the family home and downsize?
All of these lifestyle choices can impact how much money you will actually need to retire, selling the family home for example has been a successful strategy for people highlighted in the video below.
A look at some other retirement living alternatives https://www.youtube.com/watch?v=T4mmlzYjO6I
However, moving forward as the economic conditions change, this option may not be as lucrative for the upcoming generations to be able to afford the high prices that those who are retirement want. So factor into your plan an inability to sell the family home for the price that you either need or expect.
So as far as the retirement industry is concerned retirement planning is all about the finances of retirement, but your retirement planning strategy should really concentrate on the what and where, rather than the how much you’ll need or have. Once you plan on what you want, getting there will be made much more simple in terms of the cost to achieve your ideal retirement life.
Preparing to leave the workforce or close your business or hand it over is also crucial to your retirement plan and I talk more about that here.
