December 6, 2023

Retirement should be a time to enjoy the fruits of your labour, but to do that comfortably, you need to have a retirement plan in place. Your superannuation account is an excellent starting point for retirement planning. To avoid running out of money prematurely, there are a few things to keep in mind when planning for retirement in Australia. In this blog, we will delve into the key things you need to know to retire comfortably, including how much super you need to retire at 55

Calculate your current super balance and expected expenses in retirement 

The first step towards retirement planning is to determine how much you have saved in super, and how much you will need to finance your retirement. The Australian Securities and Investments Commission (ASIC) has a free-to-use online calculator called Moneysmart, which you can use to calculate the gap between what you have saved and what you need to achieve your desired lifestyle in retirement. 

Understand the impacts of ageing on your retirement savings in Australia

As you approach retirement age, it’s essential to understand how ageing will impact your finances. This includes life expectancy and relevant health concerns that may arise. The average life expectancy in Australia is over 80 years, and this means your money needs to last at least that long. 

Consider the pros and cons of working longer versus retiring early in Australia

Although most people typically retire between 60-65 years old, some people want to retire earlier. However, there are both advantages and disadvantages to this. Retiring early means that you have to use more of your savings to maintain your desired lifestyle as your funds have to last longer. On the other hand, working for longer means you can accumulate more savings, but it may also mean delaying retirement for longer. 

Explore different investment strategies to reach your retirement goals 

Investing in a high-performing superannuation fund is another vital step towards retirement preparation. It’s crucial to explore different investment strategies with advice from financial professionals to help you achieve your retirement goals. You could choose between a lowfee index fund, a high-growth fund, or a diversified fund. 

Check your superannuation preservation age and your Age Pension eligibility age 

Another critical aspect in retirement planning is knowing when you can access your superannuation funds and eligibility for Age Pension. The preservation age for your super is based on your date of birth, and you can access your super when you reach this age. Alternatively, the Age Pension is a government income support scheme that you can qualify for if you meet certain requirements, including Age Pension eligibility age. 

Investigate transition-to-retirement strategies if you plan to reduce work hours 

If you want to retire gradually or reduce your work hours without reducing your income, you may consider a transition-to-retirement strategy. This strategy allows you to draw down a portion of your superannuation as an income stream and supplement your reduced earnings. 

Retirement planning is essential to ensure that you have the financial resources to live comfortably throughout your golden years. Although the thought of retirement may seem daunting, with careful planning and the right advice from financial professionals, you can breathe a little easier knowing that you have a clear roadmap. Remember to start planning as early as possible and use online calculators such as Moneysmart to help you gauge how much super you need to retire at 55.