6 tips to start your retirement planning

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. A recent study into retirement confidence has shown that this can help you to feel more confident about your retirement, both financially and mentally.

Before you start planning your retirement, it's important to take some time and think about what you want your retirement lifestyle to look like. Do you want to embark on a travel bucket list or maybe just explore your state? Do you want to retire fully, or do you plan on working 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 6 steps.

 

1. Know when you can access your super

Let’s talk about age. There are two important numbers that you need to know about: your Preservation Age and your Qualifying Age - there’s a difference between the two.

Your Preservation Age

Birth year Age you can access your super
Before 1 July 1960                                                        55
 1 July 1960 to 30 June 1961                                              56
 1 July 1961 to 30 June 1962                                              57
 1 July 1962 to 30 June 1963                                             58
 1 July 1963 to 30 June 1964                                              59
 1 July 1964 or after 60


Your Qualifying Age

This determines when you can apply for the Government Aged Pension. Your Qualifying Age is higher than your Preservation Age, because even if you’ve reached the age where you can access your super, you still might not be old enough to qualify for the Age Pension. There are several eligibility requirements you need to meet, including residency status and income.

Use the following table to find your Qualifying Age:

Qualifying Age 

If you were born... Your qualifying age is
Before 1 July 1952                                                            65 years
From 1 July 1952 to 31 December 1953                                 65.5
From 1 January 1954 to 30 June 1955                                  66
From 1 July 1955 to 31 December 1956                                 66.5
On, or after 1 January 1957                                       67

 

READ MORE: PRESERVATION VS QUALIFYING AGE


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, this will help you 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 can impact your retirement planning, the Association of Superannuation Funds of Australia (ASFA) have published a detailed retirement budget breakdown.

Example: Retirement budget breakdown  
Modest lifestyle
Comfortable lifestyle
Expenditure Items Single person Couple Single person Couple
Housing $101.75 $114.35 $119.15 $124.56
Electricity and gas $36.95 $49.62 $46.81 $58.05
Food $94.01 $174.30 $121.55 $211.27
Communications $18.20 $20.50 $22.76 $29.62
Household goods and services $33.90 $39.84 $74.29 $91.66
Clothing and footwear $20.49 $38.94 $27.37 $50.97
Transport $89.24 $95.35 $145.61 $158.01
Health services $50.25 $96.89 $103.06 $192.83
Leisure $95.84 $150.27 $185.81 $279.12
Total weekly expenditure $540.62 $780.06 $846.42 $1,196.08
Total annual expenditure $28,220 $40,719 $44,183 $62,435

Data source: Association of Superannuation Funds of Australia (ASFA) Retirement Standard – March quarter 2020   

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 deductible.

 

3. Understand your retirement income options

There are 3 main sources of potential income in retirement: your super, the Government Age Pension and any assets you have.

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 that 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-winning1 account based pension is called Choice Income. 

EXPLORE: ACCOUNT BASED PENSION - CHOICE INCOME


Government Age Pension

Around 62%2 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 once you’ve retired, if you’re eligible.  

To be eligible for the Age Pension you must meet the age and residential 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 that 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 Preservation Age and Qualifying Age determine when you can access your super or apply for the Age Pension, it is up to you to decide when you retire. For many people reaching Preservation Age comes before they’re ready to stop working. Transitioning into retirement slowly offers a balance between finishing your working life and entering retired life.

 An easy way to keep working and start accessing your super once you’ve reached Preservation Age is to open a 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 more.

EXPLORE: TRANSITION TO RETIREMENT - TTR INCOME ACCOUNT


4. Discover your retirement confidence score

AustralianSuper and Monash University surveyed over 3000 people aged 50 and over to see how confident they feel about retirement.

The study found that there are 4 key factors to feeling confident in retirement including:
  • financial awareness,
  • health and wellbeing,
  • social factors,
  • and retirement awareness and planning.

The average score for Australians in, and approaching retirement was 63 out of 100, and the study found that people in retirement reported higher levels of confidence than those approaching retirement.

Discover your own score, and read more about the findings with the Retirement Confidence Index tool.

DISCOVER YOUR RETIREMENT CONFIDENCE SCORE

 

5. Check your insurance cover

While most super funds offer automatic insurance, it's important to make sure that your insurance cover is right for you. As you get older, your needs change. This might mean your current level of insurance could be too much or too little.

Certain situations might be a good opportunity for you to reconsider your cover including your adult children moving out or a change in your relationship status.

Depending on where you’re at in your 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 access their existing cover.

 

6. Ask for advice if you need it

AustralianSuper offers a range of advice and support to help you plan your retirement, including webinars from our education team.

These free videos give some simple insight into how to plan, and what you need to focus on, to help you learn about retirement planning.

REGISTER FOR A WEBINAR

 

It’s never too early to think about retirement

Our Retirement Confidence Index shows setting goals and planning for retirement increases confidence. The study surveyed over 300 Australians age 50 and over. It also found that financial worry reduces in retirement years.

 

START PLANNING FOR YOUR RETIREMENT

 

Sources:

  1. Received the Canstar 5-Star Rating for Outstanding Value Account Based Pension in 2019.
  2. Based on data from the Australian Bureau of Statistics and Department of Social Services.
  3. Retirement Confidence Index 2020. A study carried out by AustralianSuper and Monash University found that goal setting and financial planning aided retirement confidence in those age 50 and over.

This may be general financial advice which doesn’t consider your personal objectives, situation or needs. Before deciding on AustralianSuper read the Product Disclosure Statement available at australiansuper.com/pds. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.

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