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5 tips to plan for your golden years

Retirement can be a truly rewarding time, and with the right planning, you’ll be able to protect your retirement savings wisely.

Australia has one of the highest life expectancies in the world. A 65-year-old man today will live, on average, nearly 20 years longer and a woman the same age can look forward to about 22 more years. Furthermore, since life expectancy is increasing, today’s younger generations are likely looking forward to even more ‘golden years’.

While this can be good news, it also means you need to take those extra years into account when you’re planning your retirement income. The challenge is to find a balance between overspending in the years straight after you retire and then running into financial issues down the line, and living more frugally than you need to.

Even though there are lots of variables involved in how much you’ll have in retirement, there are some simple steps you can take to prepare for a longer post-working life.

1. Maximise your retirement savings

Extra superannuation contributions, optimising your investment mix and ensuring you’re adequately insured will help build a savings pool less likely to be eroded by your expenses in retirement.

2. Work longer

Planning to work a little longer (either full-time or part-time) means you usually won’t need to start drawing on your retirement savings so soon.

3. Match expenses to your income

Whether you receive an income stream from your super or another investment source, the simplest way to minimise your risk of running out of money is to budget based on your actual income. Bear in mind that in early retirement, you may enjoy a more active lifestyle than later in life.

4. Invest to match your life stage

Ensuring your investment mix is right for today’s needs and your long-term objectives will help you preserve your capital for longer.

5. Remember your safety net

As your circumstances change over time, you may find yourself eligible for the Age Pension (full or part). Currently the Age Pension is $826.20 per fortnight for a single person and $1,245.60 for couples. Be aware the age limit is increasing to 67 years of age for those born in 1957 or later, which could affect your savings.

Retirement can be a truly rewarding time, and with the right planning, you’ll be able to protect your retirement savings wisely. If you need some help creating strategies that suit your individual circumstances, it may be worth seeking professional advice.

About the Author
Gemma Dale , nabtrade

Gemma Dale is Director of SMSF and Investor Behaviour at nabtrade. She is the host of the Your Wealth podcast, a fortnightly podcast for investors, featuring insights and updates from markets and finance experts across a range of topics. She provides regular market and finance commentary on ausbiz and in other media including AFR, the Australian, ABC and commercial tv and radio. Gemma was previously the Head of SMSF Solutions for nab, and the Head of Technical Services for MLC, where she led a team of specialists providing advice to advisers and their clients on SMSF, super, tax, social security and aged care.