How can I make my retirement dream a reality?
“I’ve found those that are most content and happy in retirement have a well-defined purpose in the non-working phase of life,” says AMP financial adviser John Dani.
Mr Dani, who has worked with hundreds of people and couples in retirement says it’s important for those who are thinking about stopping work to create goals to keep busy.
“Consider what is an interest, pastime, activity, volunteering, course of study that will provide a sense of achievement and progress? What groups can you join? What new skills can you learn,” he says.
“Even for travel (when it is available again) think about how purpose can be incorporated. For example, increasingly clients travel specifically to research their family history. Others incorporate environmental activities. And what I’ve told lots of clients is to consider a ‘trial retirement’ by taking an extended time off work for three to six months to experiment with how you may fill your time in retirement.”
But Mr Dani says it’s important to make sure you are financially sound and have worked out a sensible retirement income that you can live off.
While every person’s retirement expectations are different, Mr Dani suggests some figures according to the Association of Superannuation Funds of Australia.
“Some good rules of thumb are useful here. For a couple, a comfortable retirement is approximately $60,000 per annum, and for a single person it is about $45,000 per annum,” said Mr Dani.
“But everyone’s needs are different. Get a good handle on how much you need to pursue your purposeful retirement. Once you know how much you need, then you can work towards building retirement savings within super and outside of super to meet your retirement living needs.”
The other key thing Mr Dani suggests is that pre-retirees work towards becoming debt free.
“In 2016, one-in-three people retiring in Australia still had money owing on their mortgage and this seems to be increasing. I believe that being debt free is crucial to making retirement dreams come true,” he said.
“The last thing you want to be concerned about in retirement is making home loan repayments and changes to interest rates. Being debt free, and in particular making sure the mortgage is paid off, provides a sense of relief and financial freedom that can make all the difference to your retirement.”
Mr Dani said particularly before the pre-retirement phase, it’s wise to consider getting a financial adviser. But, make it clear to the adviser what you want to achieve.
“Be clear on what your goals are. What is it you want to achieve? The more specific you are about what is important to you, the more fruitful the process will be. Let me give an example. If someone was to meet with me and say, ”I want to retire pretty soon can you help me?’ I can’t do much with that because it is too vague. And we will need to spend a lot time to understand what they really want.”
“Instead, if a person says ‘I hope to retire when I am 62 and I want $50,000 per year’ then this makes the process much easier and more engaging because now we have something clear that we can immediately start exploring. If you can clearly state what your top three or four goals are then this will really help to get the most of the relationship.”