A recent survey asked retirees to name their number one fear.

What do you think it was?

Climate change? Terrorism? Global Pandemic?

No, the number one fear of retirees was outliving their savings.

While many don’t know how much they will have saved for retirement and how much they’ll need in retirement, the number of people starting to think about their retirement plans is increasing.

This being said, most Australians are not prepared to compromise the lifestyle they have dreamed of in retirement.

Many have reduced their current spending, whilst some say they will continue to work for longer to avoid a lifestyle downgrade once they finish work, whilst a small group would be happy to re-adjust their lifestyle expectations to ensure they could retire sooner rather than later.

The past two-three years have increased people’s fears that retirement will not live up to their expectations and that their non-work lives will be hamstrung by financial concerns.

Long story short – the stakes are high when it comes to retirement planning.

There are no do-overs. You only get to go through retirement once.

You literally get one shot at this thing and there are a million places to make mistakes that could wind up costing you a lot of unnecessary pain/money.

As a retirement financial planner, we get the collective experience of going through retirement hundreds of times with our clients. This supports people in learning from others mistakes and avoiding the many pitfalls that come with retirement planning.

For many looking to retire, a mix of health concerns, market volatility, rising cost of living and employment disruptions over the past two-three years have raised more concerns around when is the right time to retire.

Retirement is highly personal, there is not a “right time” or a one fits all solution or process. As you need to ensure you understand your individual retirement needs and how they will be meet.

In saying that, how do you financially prepare to retire?

We can provide generic guidelines, so most have an idea of where to start. However, you have a unique life, have pictured a unique retirement, with unique retirement problems. And unique problems require unique solutions, which cannot be figured out in a short article.

However, with many of our clients looking to retire we start with:

where you are now
This looks at everything from your financial situation, to your health, cost of living, mortgage, superannuation and income.
where you want to be
This considers where you want to be? It may be retirement, however for many it is the choice of working or not. The freedom and flexibility to work in a field that they are passionate about and not to be tied to a role because of their lifestyle needs.
Building the bridge – between where you are now and where you want to be
This involves all the strategies, whether that is tax strategies, investment strategies, ensuring your superannuation is set up for the next phase of your life, considering the impact of social security (Age Pension) and how this can increase your capital longevity, to ensure your retirement goals and dreams can be met in the timeframe you are looking at.

Again, this is very high-level and supports you in building the framework of preparing yourself financially for retirement.

As illustrated above, as financial planners we tend to work backwards with our clients, with the end in mind. Partnering with them to work out how much you need each week to live in retirement. Splitting the income needs up, between basic income needs, comfortable living needs, holiday/additional needs.

Once we understand how much you require at each level, we are able to work with you to put in place a plan to achieve these goals and layer your income.

This may include using your superannuation, age pension entitlements, property income, investment income, annuity income, part time work, as illustrated below.

It's important to consider what retirement looks like for you, the cost attached to this lifestyle and the plan you need to put in place to achieve this over the time frame you have.

Remember everyone is unique and you will not have the same retirement plan as your friends, family or work colleagues.

Those looking for a more in-depth DIY solution, may consider answering these 65 questions to prepare yourself for retirement:

Do you have to retire by a certain age?
How is your health?
Can you work for another 1, 3, 5 years?
What will your life look like after work?
What does retirement look like?
How will you be spending your time?
What’s on your to do list?
Are you joining a social group or organisation? (Men’s Shed)
Are you looking to give back to the community and volunteer?
Where are you living?
Are you travelling?
How often do you wish to travel?
Where are you travelling to?
How much will travel cost each year?
How much income do you need to meet your lifestyle?
Where will your income come from?
Do you still have a mortgage when you retire?
What is your debt repayment strategy?
What is your retirement plan?
How will your income be met?
Do you have enough assets/superannuation?
Is there a gap in your assets and the income your require?
Do you qualify for the Age Pension?
Is $38,000 Age Pension sufficient income to live comfortably?
Where does your assets sit? Personal name? Super fund?
Are you withdrawing your money from super?
How do you withdraw money from super? Income/Lump Sum
Are you looking to make any final superannuation contributions?
Are you downsizing and looking to make a contribution to super?
Do you understand the “Downsizer rules”
Do you have annual leave and long service leave?
Do you know the best time to retire to minimise your tax liability?
Are you keeping your money in the tax free super environment?
Are you starting an income stream with your super?
Are you in the right super fund?
Did you compare your super fund with four other providers?
Is capital gains tax payable when moving from accumulation to pension phase?
Are the superannuation administration & investment fees satisfactory?
Do you have an investment strategy applicable to your plan?
What is your financial capacity to take risk?
What is your need to take risk?
What is your desire to take risk?
How much risk is right for you?
Does your super offer suitable investments for your risk, investment strategy & plan?
Do you have sufficient cash reserves to meet two years worth of income payments?
What is your capital longevity?
What is your expected life expectancy?
Is there a gap between your capital longevity & life expectancy?
Have you planned for later life?
Do you know your age care options?
Do you know the costs of aged care?
How will the aged care costs be met? (do you need to sell your home)
What happens if you are sick and your partner needs to stay living in the family home?
Do you understand the superannuation death tax payable should you pass?
What is your strategy to reduce the potential death tax?
Do you have a will?
Will your estates be distributed in the most tax effective manner?
Will there be a challenge on your estate?
Do you have a Power of Attorney?
Do you have an Enduring Power of Attorney?
Leave a legacy?
Is the legacy for your family? charity? Loved ones?
How are you leaving the legacy?
Via assets, income or a combination?
Are you on track to retire on your terms?

Meet The Author

Matthew McCabe

Matthew McCabe is an expert financial planner who has been in the financial services industry for over 18 years. He specialises in supporting everyday Australians retire on their terms by making the complex seem simple.

Matthew is the founder of Newcastle Advisors, an organisation that is dedicated to empowering individuals through financial literacy and education, to ensure Australians have the tools and information to make an informed decision about their financial future.

Matthew has also been a finance expert contributor to the Newcastle Herald, Channel 7 News, Canberra Times, Starts at 60 and Hunter Headline.

How to financially prepare yourself for retirement?