11 October 2024
The perfect retirement will look different for everyone, but what people do have in common is the need to have some sort of plan in place. It’s never too early or too late to think about your life after you finish working.
Before you start planning your retirement, it's important to think about what you want your retirement lifestyle to look like. Do you want to travel and explore the world or just your own state? Do you want to retire fully, or work part-time for a few years? Or maybe you have some home renovation plans and want to finally perfect your hobby. The best thing about retirement is that it’s your choice.
Setting clear goals and developing a plan will help you achieve your vision - a good place to start is with these 5 steps.
1. Know when you can access your super
You can access your super when you reach 60 years of age and retire. The meaning of ‘retire’ depends on your age and how and when you finished work:
- If you’re 60-64:
- You stopped working permanently, or
- You stopped working for any employer after you turned 60
- If you’re 65 or older: you can access all your super, even if you’re still working.
LEARN MORE: ACCESSING SUPER IN RETIREMENT
2. Consider how much you’ll need for your retirement
The right time to retire doesn’t just come down to your age. Your current and future financial needs should also be a key consideration in your decision.
Think about the type of life you want to lead in retirement to help estimate how much your retirement years may cost. This can also depend on whether you’re single or in a relationship. For an idea of how this could impact your retirement planning, the Association of Superannuation Funds of Australia (ASFA) publishes a suggested lump sum amount needed by the average Australian to fund a comfortable or modest retirement, as well as a quarterly retirement budget breakdown.
A clear idea of how much the average person or couple spends in retirement can help you plan your finances. You can also use the AustralianSuper Super Projection Calculator to get an estimate of how long your super may last.
EXPLORE: SUPER PROJECTION CALCULATOR
It’s never too late or too early to take steps to maximise your super. While you’re still working, consider making voluntary contributions to your super to grow your balance. Even adding small amounts can make a huge difference over the long term. Any extra contributions could also be tax deductible1
3. Understand your retirement income options
There are 3 main sources of potential income in retirement: your super, the Government Age Pension and any income-producing assets you have, such as: rental property, holiday house, collectables and shares.
Super
Even when you reach your preservation age you can keep your super working for you. Depending on your circumstances, whether you want to retire or keep working, there are options to consider.
If you’re a member of AustralianSuper, you can check your balance in your online account, and also on the AustralianSuper app.
Account based pension – paying yourself from your super
Did you know you don’t need to take all your super out at once?
The option of an account based pension allows you to draw a regular income from your super while it continues to stay invested. You can also access extra money whenever you need it.
AustralianSuper’s award-winning2 account based pension is called Choice Income.
EXPLORE: ACCOUNT BASED PENSION - CHOICE INCOME
Government Age Pension
As at 31 March 2023, around 63%3 of Australians over the age of 65 receive either a part or full Government Age Pension. The Age Pension is a regular fortnightly payment which can provide you with a supplementary income if you’re eligible.
To be eligible for the Age Pension you must meet the age and residency requirements and pass the income and asset test. If you’re eligible, your Age Pension payments can supplement your income payments from your super.
READ MORE: GOVERNMENT AGE PENSION ELIGIBILITY
Assets
Personal savings and assets, such as property and shares, can also make up part of your income in retirement. It’s good to understand the role your assets play in your retirement plan.
For example, one option available to Australian homeowners is downsizing. If your home is too big for your needs in retirement and you downsize, you may be able to contribute money from the sale of your primary home into your super.
VICKI’S STORY – DOWNSIZING YOUR PROPERTY FOR FREEDOM IN RETIREMENT
Continue to work in retirement
While your age determines when you can access your super or apply for the Age Pension, it’s up to you to decide when you retire. Many people continue working in their 60s and beyond. Transitioning into retirement slowly offers a balance between finishing your working life and entering retired life.
If you want to keep working and start accessing your super once you’ve reached Preservation Age, you could consider opening a Transition to retirement (TTR) Income account alongside your regular super account. A TTR Income account gives you the flexibility to top up your take-home pay, so you can work less or save more4.
EXPLORE: TRANSITION TO RETIREMENT - TTR INCOME ACCOUNT
4. Check your insurance cover
While most super funds offer automatic insurance, it's important to make sure your insurance cover is right for you. As you get older, your needs may change. This might mean your current level of insurance could be too much or too little.
Certain situations, like if your children move out of home or your relationship status changes, might be a good opportunity for you to reconsider your cover.
Depending on where you’re at in life you might consider the following cover types:
- Income Protection
- Total & Permanent Disablement (TPD) cover
- Death cover (also known as life insurance)
LEARN MORE: UNDERSTANDING YOUR INSURANCE COVER
It’s important to note that insurance cover is not included with the Choice Income or TTR Income accounts. For this reason, some members choose to maintain their super account so they can keep their existing cover.
5. Ask for advice if you need it
AustralianSuper offers access to a range of advice5 and support to help you plan your retirement, including webinars from our education team. These videos give simple insight into how to plan, and what you need to focus on, to help you learn about retirement planning.
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Sources:
- Before adding to your super, consider your financial circumstances, contribution caps that may apply, and tax issues. Consider getting financial advice before deciding what’s right for you.
- AustralianSuper received the Canstar Outstanding Value Award – Account Based Pension in 2018-2024. Read the full methodology here. Awards and ratings are only one factor to be taken into account when choosing a super fund.
- Australian Institute of Health and Welfare. Release date 07 September 2023.
- Transition to Retirement (TTR) can be complex and isn’t suited to everyone. It’s a good idea to get financial advice before deciding if a TTR Income account is right for you.
- Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. Fees may apply.
This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/PDS or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.
AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.