Life may be short but early retirement might be, too, if you don’t have a solid financial plan for life after work.
In Australia in 2021, men aged 45 years old were expected to retire at age 65.2 and women were expected to retire almost a year earlier at 64.3 years old. Since 1991, the expected retirement age has increased by 3.5 years for women and 1.9 years for men.
“I think COVID has increased the interest in retirement generally and accelerated the number of people retiring early,” said Lazetta Rainey Braxton, co-CEO and senior financial planner at 2050 Wealth Partners in Brooklyn, New York.
“People are rethinking everything and often more emotionally than practically.”
Ready to retire financially?
Firstly, decide how you want to live and plan a suitable financial strategy. Ideally, the strategy should provide things like:
- regular income to meet regular expenses;
- access to long-term capital growth;
- a cash reserve to cover emergencies; and
- a balance between risk and return.
If you want to live off your superannuation before turning 60, you are likely to pay tax on any payments you receive, regardless of the type of payment you get (i.e. lump sum or super pension).
When accessing super, you must also withdraw a minimum level of pension income each year.
The minimum drawdown from a superannuation pension income stream for the 2021/2022 financial year is calculated by multiplying your pension balance by the minimum drawdown rate. This is then recalculated on 1 July of each subsequent financial year.
Finally, you need to stay healthy so you can enjoy your retirement. Consult your GP, but most healthy people in their 60s should have the following tests:
Every year:
- an osteoporosis risk assessment;
- a dental check-up;
- a flu vaccination (over 65); and
- a hearing test (over 65).
Every two years:
- a heart disease risk assessment;
- a blood pressure check;
- a mammogram (women);
- check for bowel cancer; and
- an eye test.
Every three years:
- a blood glucose test.
Every five years:
- cholesterol and lipids checked; and
- cervical screening test (women).
At regular intervals:
- skin cancer checks; and
- a falls assessment (over 65).
Good planning – and taking care of your health – is key to an enjoyable retirement.
