How do you even start planning for retirement?

September 3rd 2019 | Categories: Retirement |

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How do you even start planning for retirement?

Whether you’re 25 or 50, planning for retirement can seem like a monumental task. As many as one in five Australians aren’t thinking about their financial future past retirement, either because it simply feels too far away or they feel retirement planning is only for the wealthy, according to MoneySmart. Meanwhile, industry super fund Australian Super reports that less than half of Australians over 50 have plans for their golden years.

Creating a plan for retirement as early as possible is the best way to ensure you’ll be looked after when you retire, regardless of how much money you have. By building a plan, you can start organising your finances to set you up for a healthy, happy and comfortable retirement. The more time you have to do this, the more you can benefit from compounding interest and adapt to changes in your life and the economy.

That said, we know retirement planning can seem like a bugbear you’d rather avoid until later. To help you get the wheels turning, here are some tips to make thinking about retirement a bit simpler.


If you would like to discuss your options and how you might manage it from a financial perspective, please get in touch.

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No matter what stage of life you’re in, it’s always a good idea to plan your retirement.

1. Paint your retirement picture

How do you want to live once you reach retirement age? This can be hard to think about in great detail while you’re still young, but you might have some vague ideas. For example, maybe you’d like to spend a lot of time travelling. Or perhaps you’d like to move to the regions and enjoy some peace and quiet. You might only know you want to live comfortably. That alone is a great place to start.

Pre-retirees interviewed by Australian Unity cited these as their top goals for retirement:

You can keep this process going using our “Painting Your Retirement Picture” guide, which contains information and worksheets to help you understand where you’re at now and how you’d like your retirement to be.

With the clarity gained by understanding what you’re aiming for, you’ve got the first step down. Now, you can start to think about how you’ll achieve that goal and what needs to change.


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What sort of lifestyle do you see yourself living in retirement?


2. How will you achieve your perfect retirement?

Often the largest concern in planning for retirement is about money. How will you afford retirement?

Most Australians plan to use their superannuation or Government Age Pension as their primary source of income in retirement, according to Australian Super.

The Government Age Pension is granted to Australians past pension age (currently 66 years old, but due to increasing to 67 by 1 July 2023). The table below demonstrates the maximum value of your pension payments. These will decrease depending on the other income you receive. Specifically, the value will decrease by 50 cents per dollar for every dollar of other fortnightly income over $174 if you’re single, or $308 if you’re a couple.

Per fortnight Single Couple each Couple combined Couple apart due to ill health
Maximum basic rate $843.60 $635.90 $1,271.80 $843.60
Maximum Pension Supplement $68.50 $51.60 $103.20 $68.50
Energy Supplement $14.10 $10.60 $21.20 $14.10
Total $926.20 $698.10 $1,396.20 $926.20

Source: Department of Human Services


Meanwhile, the Association of Superannuation Funds of Australia (ASFA) estimates a single person needs $43,601 per year to live a comfortable lifestyle in retirement, or $1,676.96 per fortnight. So, most people will want to support their future via their superannuation fund, or other investments.

Your superannuation can be topped up by the Government Age Pension, helping you get closer to your financial retirement goals.

Let’s take the following example based on a single person:


1. Firstly, let’s look at super. If by the time you retire you have $500,000 in your superannuation pension account, you’ll have a fortnightly income of approximately $961.54, provided you access an even amount every two weeks over 20 years. This is calculated as $500,000 divided 520 (26 weeks x 20 years).


2. Second, let’s look at the Government Pension. Assuming you’re single and not eligible for any pension supplements, your fortnightly pension is calculated as $843.60, minus 50 cents for every dollar of other income you receive over $174. If you’re receiving $961.54 in super, that would mean 50 cents per dollar of $787.54 ($961.54 – $174). Your pension entitlement would, therefore, be decreased by $393.77.


3. Finally, let’s combine these. Your pension allowance would be $843.60 minus $393.77, or $449.83. Add this to your super payments of $961.54, and your fortnightly income will total $1411.37.


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Reach retirement knowing you have everything you need to live a fulfilling lifestyle.


3. Where are your retirement savings now?

Combining super, Age Pension and other investments is a great way to create security for your retirement. Now you know what kind of savings you’re aiming for, it’s important to see where you’re at currently.

Start by locating any lost super. When you change jobs, name or address, it’s possible your super can get lost. Fortunately, you can track it down yourself using ATO’s online services via myGov and consolidate funds into a single account.

Then, take a look at Invest Blue’s Super and Savings Benchmarks to see how you stack up against the ASFA retirement standard and the median super balance of recent retirees. Now that you can see whether or not you’re on track for your retirement, it’s time to think about what you can do to either continue on the right path or correct your course.

This is where independent financial planning advice comes in handy. Whether you’re nearing retirement already, or simply creating a long-term financial plan, getting personalised advice from an experienced planner will help to identify the best strategies for you – some you may not have even known were options.

We have worked with several hundreds of clients who have moved into their retirement phase and beyond, and have supported numerous different approaches to retirement. Our financial planners are experienced in retirement planning and will be able to help you understand what is important about money to you, what you have, and what you need to realise your goals and dreams. With this information at hand, they can help you map out what your best possible life can look like.

No matter what stage of life you’re in, it’s a great idea to start thinking about your retirement. While it’s never too early to plan, it’s also never too late. To begin the conversation about your future, reach out to Invest Blue today.


Get in touch with us, we can help you map out your coming years and build a financial plan that models out your cash flow needs in line with the things that are most important to you.

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What you need to know

This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.