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Are you ready for retirement? Four questions to ask

Choosing when to retire can be one of the biggest financial and lifestyle decisions you’ll ever make.

In order to have the freedom to make lifestyle choices in retirement it’s important to plan ahead. While it might be tempting to put retirement strategies in the too-hard basket, or leave them for another time, doing so could actually put your retirement at risk.

Here are four essential questions you should ask yourself in order to plan for a successful retirement.

Ready for retirement

1. When can I retire?

There is no fixed age at which you can and should retire – the choice is yours, and it’s a very personal decision.

But you do need to bear in mind that your access to retirement benefits like superannuation and pensions is regulated according to when you were born. Generally speaking, you can access your superannuation when you reach the preservation age and the age pension from 65 years old. However, across the Western world retirement ages are actually on the rise, and are expected to increase even further as the federal government changes eligibility requirements for the pension.

You can check your own situation by using an online calculator.

2. Will I have enough money?

One of the most crucial questions you need to address surrounds how you will afford to live during your retirement. What kind of financial security will you have? What kind of lifestyle do you need to sustain?

Given retirement can start before the age of 65, and statistics show the average Australian is expected to live another 20 odd years if they are currently 65, there’s a lot riding on getting your superannuation right.

It’s never too early to start thinking about these practicalities, even if retirement is many years off. The earlier your start planning financially for your retirement, the better. But on the flipside, it’s never too late to top up or charge your superannuation and make last minute adjustments to your financial strategy if you are approaching retirement.

Do the essential maths. How much will your living costs be? What income will you have?

It’s critical to work out what kind of superannuation will suit you best. Are you better off with a managed fund or do you have the expertise to take advantage of the lower running costs, tax benefits and wider investment options of a DIY self-managed superannuation fund (SMSF)?

Have you looked into salary sacrifice or other ways to boost your superannuation? Which investment classes will provide the best returns? Do you need to diversify? Also, bear in mind that your appetite for risk in investments will change depending on your stage of life.

3. How will I manage the changes to my lifestyle?

While retirement practicalities like superannuation and financial security are crucial to anyone’s retirement, don’t forget the bigger picture – and also plan to enjoy your retirement.

Do you want to stop work the day you reach your preservation age, or do you envisage a gradual transition to retirement through scaling back and working part-time for a period? How will this fit with your employer’s plans? What financial implications will there be? How will your spouse or family be affected by your decision?

Like planning for your career, the best retirements can come from having an idea of what you want to achieve. Consider planning your retirement and know what you will be doing to fill each day, month or year. Who will your support networks or communities be?

Your retirement needs balance and a focus. Will you take up new hobbies? Embrace old sports? Volunteer, spend time with family or travel? The choices are endless.

4. Should I seek expert advice?

Given the complexity of superannuation and tax regulations, it can provide some peace of mind to seek expert financial advice about your retirement plans. A good financial planner can help you develop a strategy for financial success that can make all the difference for your retirement, regardless of what kind of income, investments and superannuation you have.

An SMSF can give you financial control and the freedom to invest your retirement savings in a wide range of assets, from term deposits and shares to residential and commercial property.

There is no one-size-fits-all approach to retirement, but planning is key. While financial security and superannuation will be at the heart of any retirement plan, don’t lose sight of the bigger picture and remember to also plan the lifestyle you want to maintain during retirement.

If you want to learn more about SMSFs, download an information pack. If you’re ready to establish an SMSF, you can apply now with ESUPERFUND.

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"I enjoy the process of investing my super by myself, which is very simple and guided all the way by ESUPERFUND."
- Kevin, NSW
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