Why it's important to plan ahead
It’s fairly common to face a lot of lifestyle changes as we get older. Whether it’s bidding farewell to the workforce, seeing our children have children, or just keeping up with our health and fitness – you can usually expect a lot of new adjustments coming your way. Mapping out your goals and strategies ahead of time means you’re less likely to encounter major issues along the way. If they do occur, you’ll be better equipped to deal with them if you’ve already laid out a course of action.
For example, you could be one of the many Australians who end up experiencing post-retirement depression after leaving your job. If you haven’t thought about this ahead of time, you could spend months or even years learning how to adjust to your new lifestyle. Having a solid plan set out can help you transition into retirement much more smoothly, even if it’s as simple as making a list of hobbies or activities that you can do to stay motivated.
Also keep in mind that laws and regulations can change at any time, especially when it comes to superannuation, age pensions, or other subsidies. Making sure you’re prepared for any major changes means you can keep your goals on track and live out the plans you’ve worked so hard to make possible.
Preparing for retirement
Retirement is a big step forward in our lives. It’s when we finally get to bid farewell to the workforce and enjoy everything we’ve worked hard for – whether it’s family, good health, financial freedom, or anything else. But it’s important to know how to make the transition to retirement and not underestimate the impact that retiring can have on your life.
The first step is to decide when to stop working. You’ll need to consider your general health, financial position, and the overall lifestyle you want to maintain. For example – if you stop working at 65 and you live until you’re 80, this means you will have no income for 15 years. It’s important to check if your superannuation or other assets will cover you for this long. According to MoneySmart, retired couples living a comfortable lifestyle will need over $60,000 p.a., while singles need about $43,000 p.a.
While everyone’s financial needs are different, common strategies to get your retirement fund in good shape include:
- making extra contributions into your super while you’re still working
- consolidating your funds to avoid multiple fees
- talking to a financial planner or expert about super investment options.
Employment options for Australians who are older or recently retired
Whether you’re looking for a slower job before retiring or just want to get back into some casual work, there are plenty of employment options suitable for our age group. Plus, with a lifetime of skills and experience behind us, working later in life gives us a chance to teach the younger generations what we’ve picked up over the years – or even put some easy income towards the retirement fund!
Common options for Australians over 60 include:
- sales assistants
- call centre operators
- delivery drivers
You can also fall back on any niche skills you might have, such as writing, creative image/video production, cooking, or others. These are great ways to earn extra money while also maintaining an avenue to express yourself. However, don’t feel restricted in your job search – if we’ve learned anything from decades in the workforce it’s that we need to do what we love!
Activities and hobbies
It’s important to find ways to spend all the extra time we have in retirement. Unfortunately, many of us find it hard to stay active and motivated after leaving the workforce, which can contribute to feelings of mental stress and loneliness.
Finding constructive ways to spend your retirement years is especially important for those with a long-term partner, as some couples may not be used to spending weeks, months, and even years together without their usual daily routine.
A lot of us tend to keep doing what we’ve always loved – whether it’s cycling, reading, or spending some time in the workshop. But retirement is a great time to explore and take up new hobbies that you’ve never considered before. Some popular activities for retirees include:
Financial planning and managing your assets
With decades of hard work and savings built up, it’s understandable that so many of us want to secure our finances and other assets as we get older. Planning your financial future as early as possible means you’ll have more freedom to move around or get a head start on your retirement. Of course, it’s always best to get a financial planner to help you out with this as everyone’s financial needs will be different.
If you own property, you’ll need to decide whether to live in it, rent it out to tenants, or sell it. A common move that many of us make as we get older is to downsize by moving into a smaller space and using our main property to earn rental income. While the additional income can be a nice boost to your finances, keep in mind that there’ll be extra work involved in managing your tenant agreements and property upkeep. Landlords Insurance may be worth looking into as it can help with unforeseen damage.
The added benefit of downsizing is that you may be eligible for government incentives if you decide to sell your home. From 1 July 2018, Australians over the age of 65 can make a non-concessional superannuation contribution of up to $300,000 from the proceeds of selling their home. This is one option for those of us who find it unmanageable to keep living in a full-size family home. Plus, it can mean more money to enjoy in retirement!
Sorting out your estate
Your estate is made up of everything you own (including things you have a legal responsibility for), and represents a lifetime of hard work. While it’s hard to think about what will happen when you’re no longer around, it’s important to make arrangements for your estate ahead of time so that your family and friends aren’t left with additional stress.
Preparing your Will (and ensuring it’s valid) is one of the best ways to start your estate planning. Your Will is a legally binding document that declares how your assets and other matters will be dealt with after you pass away. This is important because without a Will your death will be classified as intestate, which means the government will handle all your personal affairs (including the distribution of assets) themselves. This can be a time-consuming and expensive ordeal for your loved ones as there may be disputes around entitlements and responsibilities.
If you’d like to leave property and other assets to your family, you can make things easier by:
- talking to your friends and family beforehand
- making a clear list of everything you own
- deciding who gets what so there are no disputes
- having your Will looked over by a qualified professional
- keeping your Will safe once prepared.
Download our free Legal Will Kit to get started
Planning your funeral
The average funeral in Australia costs anywhere between $4,000 – $15,000. If you haven’t left money aside or made other arrangements ahead of time, your family will need organise and pay for your funeral on short notice after you pass away unexpectedly. Don’t underestimate the long-term impact this can have on your loved ones; our Cost of Death Report found that over 95% of Australians agreed that funerals create unnecessary financial stress, and in some cases it can take over a year to recover from the setback. This is why funeral insurance can be worth considering as it can give your family up to $15,000 to carry out your final wishes, or pay for any expenses.
The total cost of a funeral varies and is usually based on the type of service you choose, the location, and the number of people who will be attending.
The biggest decision you’ll need to make beforehand is whether you want to be buried or cremated. Cremations are usually cheaper than burials as you won’t need to pay for a lavish coffin or burial plot, and the overall impact on the environment is also a lot smaller. However, burials give your loved ones a tangible spot to feel closer to you, and they are often the traditional choice for those with personal beliefs.
Ultimately, funerals are becoming much more personalised these days, so don’t feel restricted in your planning. There are no hard rules or laws around how the service needs to be carried out so you can be as creative or innovative as you like. In fact, we’re currently seeing a rise in unconventional and personalised funerals in Australia.
Start planning today
If you need some inspiration and ideas when planning your next move, check out our Discovery Hub for helpful articles on retirement, estate management and more. As always, making sure your insurance is up-to-date and adequate is a great way to protect yourself from unexpected losses that can come up along the way.
Note: Australian Seniors are not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the information in this guide relates to your unique circumstances.