Life after work: Finding the right time to retire

27 Aug Life after work: Finding the right time to retire

For much of our working lives, retirement can feel like a distant destination. Then suddenly, it becomes a very real decision.

Do you retire at 60? 65? 67? Keep working part-time? Finish when the mortgage is paid off? Or wait until your superannuation reaches a certain figure?

The reality is there is no universally perfect age to retire. The right time is personal, and it involves much more than simply reaching a birthday or accumulating a particular amount of money.

Retirement is ultimately about preparing for life after work and having the financial confidence, lifestyle plans and sense of purpose to enjoy it.

Top 5 Reasons Why Finding the Right Time Matters

Your finances need to support your lifestyleRetirement income needs to fund more than household bills. Travel, hobbies, cars, home maintenance, helping family, healthcare and unexpected expenses can all form part of retirement. Understanding what your desired lifestyle is likely to cost is an important first step.

Retirement could last longer than you thinkAustralians are living longer, meaning retirement can potentially span 20, 30 years or more. Retiring earlier may sound attractive, but your savings may also need to last considerably longer. Planning for longevity is an important part of the decision.

Your health and energy matter tooThere can be a balance between accumulating more wealth and having the health and energy to enjoy it. Some people postpone retirement only to find that health issues eventually restrict the activities they had planned. Your financial position matters, but so does your ability to enjoy your retirement years.

Work provides more than an incomeFor many people, employment provides routine, friendships, purpose and identity. Walking away from a career after 30 or 40 years can create a surprisingly large gap. Retirement planning should therefore consider not only what you are retiring from, but what you are retiring to.

You want confidence, not uncertaintyConstantly wondering whether you have “enough” can make the retirement decision stressful. Having a considered strategy can provide clarity around when you may be able to retire and what your lifestyle could realistically look like.

Top 5 Tips to Prepare for Life After Work

Define your ideal retirementBefore focusing on numbers, think about lifestyle. Where will you live? Will you travel? Volunteer? Spend more time with grandchildren? Pursue hobbies? Work occasionally? The clearer the picture, the easier it becomes to financially plan for it.

Understand your retirement spendingDevelop a realistic estimate of your expected expenses. Consider everyday living costs as well as holidays, vehicles, renovations, healthcare and larger one-off purchases.

Review your superannuation and investmentsUnderstand what you own, how your money is invested and how those assets may generate income throughout retirement. Retirement planning is not simply about reaching the largest possible balance; it is also about creating a sustainable strategy.

Consider a gradual transitionRetirement does not necessarily need to happen overnight. Reducing working hours, consulting, working seasonally or moving into a less demanding role can provide additional income while allowing you to gradually adjust to having more time.

Seek advice before making the decisionRetirement brings together superannuation, investments, tax, Centrelink considerations, estate planning, cash flow and lifestyle objectives. Decisions made in the years immediately before and after retirement can have long-term consequences.

This is where professional advice can be invaluable.

A financial adviser can help you model different retirement dates, income requirements and lifestyle scenarios and identify whether your plans are financially sustainable.

Ultimately, retirement should not simply be about reaching an age when you are allowed to stop working.

It should be about reaching a point where work becomes a choice rather than a necessity.

Finding that point requires planning, realistic expectations and good advice. Get those pieces right, and retirement can become less about finishing work and much more about beginning the next chapter of your life.

If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.

This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.

(Feedsy Exclusive)