How to plan for retirement – well before you intend to  

There are many steps that you can take to prepare for retirement. 

Having a financial plan is of paramount importance 

Julianne Parkinson, founding CEO of the Global Centre for Modern Ageing (GCMA), advises those approaching retirement to regularly assess their financial plan or consult with a financial planner.

The Association of Superannuation Funds of Australia (ASFA) estimates that in 2023, for a modest retirement which includes basic private health insurance, budget haircuts, and one domestic trip a year, a couple or single person would need a lump sum of $100,000. This is assuming the couple or single person owns their home outright and receives the Age Pension. 

“Having tailored financial insights from earnings and investing, and mortgage management to budgeting techniques is invaluable,” she said.

“It will help develop comprehensive plans to consider mortgage income sources, such as savings and investment, and your lifestyle goals for lasting financial security.” 

Decide when retirement is best for you 

The average age of retirement has increased by a year to 56.3 years, according to 2020 data released by the Australian Bureau of Statistics (ABS) in August. Women are working almost two years longer and are retiring aged 54 on average, up from 52 in 2018. In contrast, the average retirement age for men decreased from 59.5 years in 2018 to 59.3 years. 

“Many older adults are now turning to entrepreneurial ventures – creating new employment opportunities for themselves,” said Julianne. 

“In fact, people over the age of 55 are among the fastest-growing groups of entrepreneurs. Partnering with a younger entrepreneur can bring added benefits.” 

By using the skills and experiences of older adults, businesses can tap into a valuable resource and drive innovation.

“Some people will be extensionists, where they continue doing something they’ve always done because they love it, or you might find people who are hobbyists. For example, if you’ve always enjoyed gardening, you might see opportunities at Bunnings.”

Working beyond 67 

The Federal Government’s recently released Employment White Paper recommends giving new pensioners a work “bank balance” allowing them to earn up to $4,000 immediately without it impacting their Age Pension payments. 

Pending the passage of legislation through Parliament, from January 1 next year all new Pension recipients and eligible veterans will start with a work bonus income bank balance of $4,000, rather than $0. 

This means you would immediately be able to earn up to that amount, rather than the current system that only allows you to accrue $300 in extra income a fortnight. 

The Federal Government also plans to make a temporary increase to the work bonus scheme permanent, meaning the maximum balance a pensioner can accrue to $11,800 a year, up from $7,800. 

Home Care Packages  

While many people aged over 65 are in good health and not in need of care services, it’s always a good idea to educate yourself on the available options.  

94% of people aged over 65 are “ageing in place”, with the number of the Federal Government’s Home Care Packages increasing markedly. 155,625 people had access to a Home Care Packages at 30 June 2020, a 24.4% increase since 30 June 2019.  

To maintain a better quality of life as you age, your home may require modifications.  

“I think the significance of home modifications – whether retrofitting, renovating or even new builds – is paramount for supporting ageing in place,” said Julianne.

“Living close to essential services and amenities also contributes to a higher quality of life for older adults.” 

A little planning now could save you a lot of money and stress in the future.