Retirement Planning Goals – what you need to know

Setting yourself up to have a comfortable retirement lifestyle with minimal financial risk is what everyone wants, but achieving a comfortable future doesn’t happen without any retirement planning. To understand what your future can look like you need to understand the basics about what your goals are, your purpose and in turn what your legacy needs are. Once you have this clear then it’s time to start developing a solid strategy to help you get there.

What people sometimes forget in retirement planning is not only the focus on the Goals that may want to be achieved but around the Purpose which is the “why” of what is important.

In this article, we’ll explain how to consider using your current financial situation and combine this with your Goals, Purpose and Legacy needs to help create a retirement plan that is sustainable and will meet the future needs of you and your family.

Not all retirement goals are the same.

We find that whilst everyone wants to have a comfortable retirement, the specifics of what people want for themselves, and their families can vary dramatically.

Some people are happy at home doing what they are doing whilst others see themselves travelling the world. Family features high as does doing those things that they have always been putting off, as they have always been too busy with work. There are also many people out there who have no intention of retiring. We sometimes find that this can be driven about the uncertainty of what lays ahead and not understanding if they can even afford to retire.

Setting retirement goals does not only allow you to be realistic about your future, but it can also help you to navigate the emotional process of such a big change in your life.

There is no “best” way to retire as everyone is different, but there is a best way to take the time and understand a bit more about the psychology of money and time and the relevant importance of each.

Realisation around where you are financially.

Assessing and having a realisation about your current financial situation is like drawing a line in the sand and acknowledging that this is where you are. Realisation involves assessing your current income, expenses, liabilities, assets to you understand your overall net worth position. Exploring business structures for tax, estate planning and your legal positions rounds off what you need to know. We like to have a clear picture of all this so we can help work through your retirement income needs and approximating your future expenses and income sources in an after tax environment.

Steps can include (not necessarily in this order)

  • Assess your current income and expenses.
  • Review your retirement savings and investments.
  • Review any potential inheritances to be received.
  • Acknowledge what you may want to leave others as part of your legacy needs.
  • Estimate your retirement income needs and future expenses.
  • Understand where other income may come from
  • Draft a retirement budget to suit your life expectancy and capital that you have available.
Expected retirement age and life expectancy.

Although this should only be a guide, understanding your life expectancy and ensuring you are planning to fund for at least this period is a good start. Now, life expectancy in Australia is 85 for women and 81 for men. With average retirement ages in the 55–60-year-old range, depending on the age you intend to retire, your retirement fund needs to fund a minimum of 25-30 years just to hit the average.

Health and medical expenses

It is a good idea to factor future medical costs as your health can have a huge impact in your retirement income planning later in life. Funding this is generally okay in the early years of retirement but as time goes on making sure you have planned funds to deal with this can take pressure off your family budget.

Retirement housing and home care

Where you plan to live after retirement can affect your regular outgoings and daily living costs. It is more and more common that people are staying in the family home longer and are bringing in hired help internally which has to be planned.

Downsizing and the impact of this to boost super savings is great, however it is becoming increasingly common that a couple in old age may need to have two retirement properties if the care of one cannot accommodate both.

Planning the Travel and the “bucket list” items.

This is synonymous with retirees and there’s a high likelihood that you have a bucket list of things you promised yourself you’ll do once you stop working and have more free time on your hands. Travel plans and big holidays abroad are frequently featured on pre-retiree to-do lists so having enough money to fund your holidays without denting your retirement income needs to be addressed.

Family and dependants

We find that family planning and financial assistance to family is on the rise. Cost of living for the kids, supporting grandkids through schooling are becoming high on the priority list. Considering this impact and how these financial commitments can affect your retirement can be hard to assess.

Inflation and tax rates

When working out how much you’ll spend in your retirement, it’s essential to factor in inflation and the rising cost of living. A higher inflation rate can significantly erode your retirement savings over time, which means you may not be able to spend as much in the future with the same amount of money you have today.

We also like to address tax rates and although in Australia we have a great tax system that looks after retirees with funds in pensions, there are also changes and things that can adversely impact tax if you are not careful. Keeping up with any new legislation or legislative amendments that could affect your tax obligations in retirement is what a Boutique Financial Advisor will help you with.

Working with a Financial Advisor to understand your Goals, Purpose and Legacy needs.

Working with a Wealth Management expert early to create the life you want can take a lot of the stress off planning your retirement. Boutique Advisers will help you with assessing your financial situation, understanding your Goals, Purpose and Legacy needs, show you how they work together and formulate modelling that shows you your options clearly. We also focus on tax and your estate planning to ensure who you care about are taken care of.

Contact Boutique Advisers to discuss your Retirement Planning needs today.