Saving for retirement

Make your retirement dreams a reality

It’s never too early – or too late – to start thinking about retirement. And we don’t mean dreaming of days free of the 9-to-5 grind; we mean actually planning for how you’ll support yourself through post-work life.

Will you be lovingly pestering loved ones? Swapping the central family home for an out-of-the-way cottage? Hitting the road with your fellow grey nomads? No matter your retirement dreams, if they’re going to come true you’re going to need a plan.

We know that planning for retirement can be overwhelming, so we’re here to help set you on the right track.

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If you’re ready to kick-start your savings journey, we’d love to chat about how we can help make your savings dreams come true.

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1. Imagine what retirement looks like

The first step in planning for your retirement is figuring out what you want your later years to look like.

Think about the things that matter most to you – do you want to travel, take up new hobbies, or spend more time with loved ones? Or maybe you just want to maintain your current lifestyle and not have to worry about finances.

Having clear retirement goals will give you a good foundation when it comes to all the preparations you need to make. And it will make sure you’re not caught in a position where your funds can’t cover the life you want to lead.

2. Assess your situation

Taking stock of your finances is a key part of planning for retirement. This means looking at how much money you make, what you spend it on, and what you have saved up and owe. With this information, you can figure out how much you need to save to reach your retirement goals.

Start by keeping track of your income and all the things you spend money on. And don’t forget to keep an eye on your savings and debt levels. If you already have a household budget, that’s a great place to start. If not, try making one with our budget planner.

Once you’ve got an idea of where you are, make some adjustments for life after retirement – like reducing work expenses, leaving room for travel, and factoring in health costs.

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3. Figure out how much you’ll have

Next up is estimating your retirement income, and finding any gaps that you’ll have to fill with savings or alternative income.

You’ll need to figure out what kinds of income you can expect during retirement, and add these up to a rough annual figure. Here are some ideas for what might be involved.

Age pension
Depending on asset and income tests you may qualify for a fortnightly Age Pension from the government.
Superannuation
Try Moneysmart’s Retirement Planner to get an idea of how much super you’ll have for retirement.
Family home
If you can, downsizing your home can be a great way to unlock wealth that can help see you through retirement.
Savings
Cash in a term deposit or savings account can give your retirement income a bit of a boost.
Investments
Ideally, you should have a diverse range of additional investments ready to contribute to your retirement.
Other income
You might have other income streams like property rentals that could help fund your retirement.

Then, subtract your expected expenses from your estimated income to get a sense of how well placed you are to retire.

If you haven’t thought about it before, putting pen to paper for this one might seem scary. But if there’s a gap between your two figures, it’s not the end of the world. It just means you’ll need to do a bit more planning and saving to get yourself on track.

How much is enough?

According to Moneysmart, most people need around 67% of their pre-retirement income to maintain their standard of living into retirement – provided you also own your home.

Meanwhile, the current Age Pension for a single pension adds up to just 29% of the average Australian full time wage.

4. Plan for how you’ll get there

If you do find there’s a gap between your expected expenses and estimated income when it comes to retirement, that means it’s time to make a plan for how you’ll boost your superannuation and savings.

At this point, you know the amount you need to make up. Divide that between the years you have before you’d like to retire to get an idea of how much extra you’ll need to save.

If that number seems high, don’t worry. There are a number of ways you can boost your savings through superannuation.

Retirement planning checklist

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5. Check in on your progress

Life moves on, and your situation will likely change as time passes. That’s why it’s important to take a look at your retirement plan every once in a while to make sure you’re still on track.

As a rule of thumb, it’s a good idea to give your plan a check-up every year or so. That way, you can make sure you’re proceeding as expected, and realign if your lifestyle or circumstances have changed.

If you need help, consider working with a financial advisor who can give you expert advice and guide you in the right direction.

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6. Decide when you’re going to retire

When you retire will depend not just on what you want, but also when you have the savings and super to support yourself through retirement. Keep in mind, there are limits if you’re looking to use the Aged Pension or your superannuation:

Currently, you need to be 66 or above to be eligible for the government’s Aged Pension
You’ll need to reach the preservation age (between 55 and 60) in order to access your superannuation

You can also consider adopting a ‘transition to retirement’ (TTR) strategy, which would let you access some of your super while you keep working. There are a range of benefits to this option, however setting it up can be complicated, so make sure to contact your super fund or financial adviser before you make any big moves.

7. Put your retirement plan into action

Once you’ve made the choice to retire, it’s time to work out the logistics of your retirement income.

For most Aussies, that will be a combination of superannuation and the government’s Age Pension. You can then supplement this with income from other investments and your savings.

When it comes to drawing an income from your superannuation, there are a number of options to choose from – and the option to adopt a combination to give yourself more flexibility.

Whatever you choose, try to make sure your pot of funds is able to keep growing. That way, you’ll maximise how long your retirement income lasts, while protecting yourself from unexpected expenses when they crop up.

Account pensions

Transfer some or all of your super into a pension account, which will then pay you a regular income – though that income relies on the market and may not last.

Annuities

Withdraw your super as a lump sum and invest it with a life insurer, who then agrees to pay you a steady stream of income for a fixed period of time, or the rest of your life.

Lump sums

Depending on your super fund, you may be able to withdraw some or all of your superannuation outright as a lump sum – either all in one go or as several payments.

8. Plan for how you’ll get there

No matter what retirement income options you choose, managing your finances is an ongoing process. Make sure to regularly review and adjust your plan to make sure that you’ve got the funds to make the most of your golden years.

Whether you’re swapping a big yard for a sweet balcony, hitting the road in a caravan, or keeping your loved ones on their toes with surprise visits – we’ll be here to help make your retirement dreams come true.

That reminds us – don’t forget to check out our wide range of retirement-ready account options – and pop into a branch with any questions you might have.

Different strokes for different folks

It doesn’t matter who you are, what your savings goals are, or what stage of life you’re in. We’ll help you save bigger and earn better so you can reach your dreams – whatever they may be.

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