This whole retirement thing can be quite complicated and there are lots of factors to consider. Here’s our Top 10. 

Perhaps it’s because your health is great, or you’re really enjoying the challenge of work, or you really love the social interaction in your workplace, whatever the reason, you just don’t seem to hear the tick-tock of the retirement clock. If that’s the case, then lucky you! Make hay while the sun shines – as they say. But every now and then don’t forget to take the time to look at your whole life, not just your working life. Make sure you get the chance to enjoy the fruits of your many years of labour – make a plan!

If you’re lucky enough to live to a ripe old age (as more and more of us are), the reality can be pretty tough – medical bills, home maintenance costs, fear of loss of independence, did we mention medical bills. If ever there was a time it would be good to have some extra money – to afford proper care and some creature comforts – then this is it.

If you’re one of those people who gets all the way to retirement age without having to stick to a budget – or even having a budget to stick to in the first place – you’re not alone, but you could be in for a shock. Once you’ve retired, you’ll find that sticking to a budget moves out of the ‘good idea’ department and firmly into the ‘must have’ department. So, why not start right now.

Learn More: Spend less than you earn

According to the Australian Government¹, the most common reasons given for retiring are, having reached eligibility age to access the age pension or superannuation, sickness, injury or disability, and being retrenched or dismissed with no other work being available.

‘Retiring because I have enough saved to go enjoy myself for the rest of my life’, didn’t make the list. Which means, not a lot of us manage to retire for that reason. Unfortunately, forced retirement could mean a double whammy. Because not only do you have less time to plump up your retirement nest egg, you may also have to make it last even longer.

Keeping your insurance cover up to date is one way to protect yourself against the impact of early retirement due to sickness, injury or disability . If a redundancy forces you into an early retirement, and you have reached preservation age, you may need to chip into your retirement savings earlier than planned. If you are a member who got cracking early topping up your nest egg, this may well pay off for you at this time.

If you’re lucky enough to own your family home, it’s probably your most valuable asset – second only to your ability to earn an income. It’s also probably your greatest source of security. Maybe it’s your pride and joy as well. So why would you sell it and downsize? Heaps of reasons:

• Once the kids have left home, those empty rooms can make you miss them even more.
• If the kids won’t leave home, it’s one way to give them a big nudge!
• It makes sense to make it available to a family that needs a bigger home.
• You can pay off any left-over mortgage and use the rest to fund your retirement and have some ‘weekend’ fun.
• Sea change or tree change – move to the country or the coast where property’s cheaper and the air is cleaner.
• Up stumps and become a grey nomad for a while
• Take advantage of the government’s $300,000 Downsizer option to top up your super before you retire and enjoy all the tax advantages it offers.

Well, if there was a single, simple answer to this question everyone would be doing it. The truth is, the best place for your savings depends on your personal circumstances. But some things hold true regardless of how much in savings you have. With interest rates currently being so low, cash investments like term deposits struggle to generate enough returns to keep pace with inflation. In which case, losing money isn’t a risk; it’s a certainty.

It’s a common enough dilemma for retirees:

• ‘If most of my money was in cash, I’d soon run out of it’
• ‘I wouldn’t be able to sleep at night if most of my money was in shares.’

There is no simple answer, but the simplest place to start is with the realisation that if you’re looking at a retirement timeframe of 20+ years, that makes it a long-term investment – which is generally suitable for holding at least some growth-style investments like shares and property. This is where the ‘bucket’ strategy may come into play. See below or ask a smartCoach today on 1300 262 241, or email smartcoach@smartmonday.com.au.

There can be different approaches, and number of buckets, in a Bucket strategy. But a typical approach is to split your savings into three buckets:
Bucket #1 is used to hold enough money invested in cash, or cash equivalents, to fund your short-term living expenses, say for a year or more.
Bucket #2 holds funds for emergency use – you know - when you really need to get that shiny new Porsche all-electric sports car, and
Bucket #3 is invested in a diversified mix of growth-style investments.

A key benefit of this strategy is that it reduces what’s called ‘Sequencing risk’ – the risk of having to sell growth-style assets at a sub-optimal time in order to fund short-term needs. If you’re a ‘bucket’ kind of person, you should talk to your financial adviser, or a smartCoach, to ensure this strategy meets your personal circumstances.

Contact a smartCoach today on 1300 262 241, or email smartcoach@smartmonday.com.au.

Having a side hustle – a business on the side – is trending big time. And not just for younger people. It’s spreading like wildfire among retired people too. And, if this looks like your future, make sure you go into it with eyes wide open.

Airbnb, Uber, Tasker, Babysitting, YouTubing – whatever. These can be great ways to top up your income in retirement but there’s a whole raft of considerations that need to be made. Here are a few:

• It could affect your Age Pension entitlement
• If you’re audited by the ATO you could be up for repaying tax on undisclosed income and there are hefty penalties too
• If you rent out your home or use it for your side hustle it could affect your Capital Gains Tax and Land Tax liability
• Do you have proper insurance to cover people working for you? And what about public liability?

A side hustle can be a great thing, it can provide you with a challenge, keep you engaged, and hopefully, provide you with a little extra cash. So by all means, weigh it up and have a shot, but make sure you check in with a financial adviser or an accountant to not get caught out.

Inheritance involves both a gain and a loss. Those you love gain financially, but you lose in the process. And that can make it very bitter sweet. But is leaving an inheritance worth it?

The biggest downside to leaving an inheritance is that to do so, most people will need to constrain the quality of their retirement. Now, we love our kids but we’ve also worked hard for most of our lives and don’t we deserve a little bit of fun as we head for the end of that long weekend we call retirement?

On the other hand, providing a financial legacy for your children can be a cool thing to do, particularly in these days of high costs and stagnant wages. It’s really a very personal matter and one that should be informed by talking with a qualified Estate Planner. After all, if you’ve worked hard enough to put some aside for your loved ones you want that windfall to be a benefit and not a tax or probate burden.

One of the aspects of retirement most people look forward to is lower expenses. ‘Once the kids are off our hands, our cost of living will be a lot less.’ If only that was always the case. Here are a few family-associated big-ticket items to consider in assessing whether you’re financially ready to retire:

• Kidults. Statistically children are living with their parents longer.
• Weddings
• Grandchildren
• Helping them get a home deposit together
• Illnesses and accidents

We can help you with ways to factor in these kinds of eventualities 

Ask a smartCoach today on 1300 262 241, or email smartcoach@smartmonday.com.au.