A few years back, when we were both still in our mid-fifties we started to think about life in retirement and commenced planning for the eventuality. Like many people approaching retirement age we were concerned whether we had enough super and enough funds to live comfortably for the rest of our lives.

We trotted along to our Financial Planner who filled our heads with lots of things to consider, and eventually after several appointments he presented us with a retirement plan. The good news is that we were on the right track financially and all going well we could live off our super into our nineties – yay for us!

How Retirement Has Changed

I remember when my parents both retired from full-time work. They were given the golden handshake and started receiving their age pensions at the age of 65 years. They didn’t have to worry about income or assets tests, because they had little savings and the only investment they had was the family home. There was also no such thing as super to help them be more financially comfortable into their golden years.

In 1992 the Government introduced the Superannuation Guarantee (SG), a compulsory system of Superannuation for Australian employees, and that changed everything. The aim of super was that it would force all workers to save for their retirement and would relieve the pressure on Australia’s age pension.

So these days, if you’re employed and you’re earning over a certain amount weekly, in most cases you are guaranteed 9.5% of your salary into a super fund of your choice. Your super funds are invested for you and will hopefully accumulate nicely to provide you with a decent little nest egg for when you retire.

Retirement Planning

To be serious I’m glad that we went through the exercise of seeking expert advice because it not only gave us a retirement plan, but it also brought us up to date with the latest in super rules and regulations. As we know these rules are ever changing and it’s difficult to keep abreast with how these changes may impact on our financial future.

There is plenty of information on retirement planning and super out there on the web. Although we’re not NAB customers, we recently discovered a great source of information on the NAB Life Moments Hub. The hub answers a lot of financial questions like how to boost your super, how to plan for your retirement, what age can you have access to your super and understanding your retirement income.

Retirement Calculator

According to Moneysmart, most people need around 67% of their pre-retirement income to maintain the standard of living they enjoyed before they stopped working. The best way to calculate how much you’ll need in retirement is to draw up a budget, keeping in mind that your current income and expenditure will alter as you get older. We went through this exercise prior to meeting with our Financial Planner and after they applied a formula and a few tweaks they were able to predict how much we need to live happily ever after!

Retirement Planning Checklist

It’s a good idea to have a checklist prior to planning for retirement. Things to consider include:

1. At what age do you want to retire?
2. Can you afford to retire at this age? Use the retirement calculator to find out.
3. Are you eligible for the Age Pension? If so make sure you’ll be able to manage on the pension.
4. Draw up a budget of your income, expenses, assets and liabilities.
5. Seek professional help with your retirement plan by either visiting a Financial Planner or if you’re a NAB customer visit the NAB Life Moment Hub for some general guidance.
6. Is there a benefit to consolidating your accounts if you have multiple super funds? Before you do so however it is really important that you speak to someone to understand any benefits you may lose in doing so.
7. Learn how you can boost your super prior to retirement to maximize it for retirement.

Accessing Superannuation

In our situation, we both started accessing our super early, once we retired from full-time work at the age of 55 years, our preservation age (your preservation age could be up to age 60 depending on your date of birth). We now work part-time and supplement our living expenses with a pension that we withdraw from our super fund. This gives us the flexibility to do some travel in our caravan and even a few overseas trips because our work is flexible.

Basically for us, what our super fund is earning from investments is what we draw out as a pension, so in effect we’re not eating into our super funds just yet. There is a minimum amount you’ll need to draw from your pension each year however (4% if you’re under age 65, increasing based on your age). This is a win-win for us, because it enables us a good lifestyle without having to work full-time. We’re definitely very fortunate to be in this position. It’s important you consider the impact on your long term retirement plan however if you do start accessing your super before you fully retire.

Downsizing Your House

Getting ready for retirement, can also involve selling the family home and downsizing to a less expensive and smaller home. Let’s face it most retirees are empty nesters and a large home no longer suits their needs or lifestyles.

There is such a thing called the downsizer super contribution that could allow eligible Australians over the age of 65 to direct some of the proceeds from the sale of an eligible long-held home into their super. The maximum amount you can contribute is $300,000 per person, so a couple could contribute up to $600,000. Other eligibility rules apply, and before you take this step it is important to consider any impacts on your Centrelink or DVA benefits by effectively increasing the value of the assets assessable for social security means-testing purposes.

In our case we are presently going through the exercise of selling our two-storey family home and making a sea change into a smaller one level home. Although we’re not old enough to make a downsizer contribution, we are speaking to our adviser on how best to use the sale proceeds to invest and boost our retirement savings.

Planning for life in retirement really doesn’t have to be that difficult after all. With good planning and financial advice you can achieve a life in retirement that you have always dreamt about.

This article is a NAB paid promotion and was written in collaboration with NAB. As always, all opinions are my own.

Any advice is general in nature and has been prepared without taking into account your personal objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to those matters

This post is part of the Lovin’ Life Linky with a Lovin’ Life Team of the “ageing positively” kind who love to promote a Lovin’ Life mindset.

The Lovin’ Life Team includes:

Lyndall from SEIZE THE DAY PROJECT