Just as you plan for all the big things in life like starting a family, moving house, or saving for a holiday, planning for your retirement is essential – and it’s lifechanging.
Proper planning can mean the difference between living comfortably versus being forced back into the workforce at an age you weren’t anticipating.
Start by asking yourself the right questions, such as: What lifestyle do you want to lead? Where will you live? Are you planning to travel? How much money will you need to live comfortably? Will it be helpful to transition to retirement at the age of 50?
Learn more about retirement planning and accessing your superannuation in this comprehensive guide.
But before we begin, know that it’s important to seek professional financial and legal advice based on your individual circumstances.
1. When Can You Access Your Super?
To retire you’ll need money. Obviously. And a weekly budget so you don’t overspend too.
Most of us will rely on our superannuation to fund our retirement and there are particular rules about when and how you can access those funds.
Your Preservation Age
You can access your super when you reach the preservation age to retire which is between 55 and 60 years. This depends on the year you were born, as shown in the table below.
Preservation Age
| Birth year | Age you can access super |
| Before 1 July 1960 | 55 |
| 1 July 1960 to 30 June 1961 | 56 |
| 1 July 1961 to 30 June 1962 | 57 |
| 1 July 1962 to 30 June 1963 | 58 |
| 1 July 1963 to 30 June 1964 | 59 |
| 1 July 1964 or after | 60 |
Source: Australian Taxation Office (ATO), accessed on 22 February 2024.
The ATO allows some exceptions for accessing your super early, including reasons of financial hardship and terminal illness.
Did you know it is illegal to withdraw your super for any reason other than what’s allowed by superannuation law? So be beware of any schemes offering ‘early access’ – particularly if you have a self-managed super fund.
Do you need to pay tax on super?
The answer to this question is dependent on a couple of factors. If you’ve reached the preservation age on your superannuation, there is no tax to pay on lump sums or on small regular drawn downs as long as your super fund has already paid the tax on the contributions.
If you choose to access your super as part of the Transition to Retirement (TTR) program, investment returns are taxed at 15 percent. And, if you’ve purchased an annuity with your super funds, a portion of that pension may be also taxed.
Your Qualifying Age
Of course there is a big difference between the superannuation preservation age and qualifying for the age pension – seven years difference!
With Australians living longer, access to the age pension has already increased from 65 to 67 years old for those born after 1 January 1957.
Qualifying Age
| Birth year | Age you may qualify for Age Pension |
| From 1 July 1952 to 31 December 1953 | 65 years, 6 months |
| From 1 January 1954 to 30 June 1955 | 66 years |
| From 1 July 1955 to 31 December 1956 | 66 years, 6 months |
| On, or after 1 January 1957 | 67 years |
Source: Australian Government Department of Social Services, accessed on 22 February 2024.
Your age is not the only hoop to jump through either. You will also need to meet eligibility requirements, including residency rules, income, and asset tests (a process called deeming), and rules around residency.
It is a good idea to gain advice from your super fund or a licensed financial and legal adviser about how you can best optimise your super to maximise your age pension benefits.
2. How Much Do You Need for Your Retirement?
The time to retire isn’t only dependent on age – it’s also about when you can afford to. This is one of many reasons why retirement planning is important.
You will need to consider:
- Your current income and financial costs
- Your future financial needs
- Your lifestyle and goals
- Your health/medical needs
- How long you might live (statistics or your family tree might help you take an educated guess)
- Your relationship status (this impacts spending)
- How much to keep for unexpected expenses.
Individual circumstances vary, however a general rule of thumb is you’ll need two-thirds of your pre-retirement income to maintain the same standard of living in retirement.
The Association of Superannuation Funds of Australia (AFSA) in September 2023 delved into lump sums at retirement in further detail. To support a ‘comfortable’ lifestyle for 20 years some $71,723,56 would be needed annually per couple, or $1,379.29 a week. For a single person in the same time period, a ‘comfortable’ retirement looked like being $50,981.27 annually and $980.40 a week. These estimates assume that you’ll draw on their capital and receive a part age pension.
A comfortable standard assumes your home is owned, you’re retiring at 65, and you’ll live to 85. The current life expectancy for Australia in 2024 is 84.06 years – an increase of 0.15% from 2023.
The ‘comfortable’ standard estimate assumes you’ll go on holidays, have leisurely interests, private health and a reasonable car and household goods. For a modest (basic) retirement, the superannuation balance is significantly less.
3. What are Your Retirement Income Options?
If you’re like most Australians who only start planning for their retirement from the age of 50 (despite the well-meaning advice from advisors who say 18 is the ideal time!), you’ll need to know where your retirement income will come from.
The answer is that it won’t all come from your superannuation and may comprise one or more of the following income sources:
- Assets
- An account-based pension
- An annuity
- A lump sum
- The Government Age Pension
- Other Government benefits
- Or a combination of these.
You may even decide to work part time while receiving the aged pension. In that case, you may be eligible the federal government’s Work Bonus incentive, where the first $300 of fortnightly income from work is not assessed in the pension income test.
Learn more about saving for retirement here.
Incentives for downsizers
To free-up larger homes for younger families, the Australian Government Department of Social Services announced incentives that came into effect on 1 January 2023 to benefit self-funded retirees and pensioners choosing to downsize.
Changes include:
- an asset test exemption following the sale of your primary place of residence is extended from 12 months to 24 months.
- the deeming rate on the exempt proceeds uses the lower rate of 0.25 percent.
- if you’ve owned your current home for more than 10 years, pensioners and self-funded retirees may be elgible to contribute up to $300,000 (up to $600,000 for couples) from the proceeds of the sale of their home into their superannuation.
Downsizing to an over-50s lifestyle resort like GemLife could provide a flexible, rightsizing option to ease your way into retirement.
Homeowners in land lease communities are increasingly realising how they can maximise their lifestyle and financial options while downsizing their responsibilities. And unlike retirement villages, there aren’t complex contracts, or hidden nasties such as entry, exit or defferred management fees.
There is a modest site rental fee, similar to a body corporate charge that cover the on-going maintenance of the resort, however the home you purchase is yours and you keep 100 percent of your capital gains should you decide to sell.
Learn more about downsizing for pensioners here.
Growing your super
If you are like the two-thirds of Australians worried that you won’t have enough super for retirement, here are some considerations you might talk to your financial and legal advisors about:
- Consolidate your super into one account so you pay fewer fees.
- Make extra contributions which can grow your super.
- Changing your super investment options.
While you are working, get into a habit of checking your super is being paid correctly. To remember easily, schedule it on the calendar each year or make it part of your annual tax time preparation. Also, check your details are correct and that super is being paid correctly by your employer as well as your salary sacrificing contributions.
4. Do You Feel Confident About Retiring?
The Australian Super-Monash University Retirement Confidence Index (RCI) found there were four key areas that affect a person’s confidence in retirement:
- Financial awareness and skills
- Health and wellbeing
- Social factors
- Retirement awareness and planning.
Interestingly, the latest data revealed that financial literacy over time has increased as people approach retirement and there is greater retirement confidence among retirees.
So whether you’re excited about retirement or feeling overwhelmed, putting a retirement plan down on a page can help you prepare psychologically and adjust to retirement, giving you peace of mind and some clear goals.
In your retirement plan, you can address challenges and how you might proactively address those. Topics might include:
- Paying off the mortgage
- Budgeting for future medical costs
- Planning home renovations
- Exploring more travel
- Lifestyle you wish to have.
Ask people you trust for recommendations on finding a good financial advisor to talk to about your individual circumstances. It can help to get a list of a few people, and then make a choice about who you wish to see.
5. Where Are You Going to Retire?
It’s one of the most exciting questions you’ll think about in retirement! Will you live at the beach? In the country? Closer to family and friends? Or downsize your home to your lifestyle?
When it comes to retirement locations, Australia has a lot of inspiration! Would you like a community, like a retirement village or an active, over-50s resort?
In considering the location, look at the lifestyle the community offers, the cost of living, shopping and retail, health facilities, infrastructure, and public transport.
Let’s look at a some of these factors in more detail.
Safety
As we grow older, or if we live alone, safety becomes more of a concern. Look for properties that have the level of security for your needs. GemLife’s over-50 lifestyle resorts are gated communities, secured with a multitude of systems for peace of mind, including number-plate recognition at resort entrances and on-site resort managers. You can go on holidays anytime knowing your home is protected.
Work
As you near the end of your working life, you might want to continue to earn an income. If you decide to move as you near retirement, are there jobs in the area you’re moving to? Working casually or part-time before you transition to retirement can boost your retirement savings and ease you into life without work.
Working options might include:
- TRR Strategy: Implementing a ‘transitioning to retirement’ strategy (TTR) by reducing your hours, but still contributing to your super.
- Switch jobs: Consider a career change, train in something new, or seek part-time work. That way you can still contribute too, or boost, your super.
- Work bonus: If you qualify for the Age Pension you can earn up to $300 per fortnight from work before you pension payment reduces.
Downsize
Did you know downsizing or moving to a ‘rightsized’ home can free up money for your retirement or help bolster your semi-retirement lifestyle?
Downsizing may help lower your cost of living, reduce the time you spend on maintenance, and reduce your financial burden. Check with a financial advisor to see if selling your home will affect any government benefits, or whether it will help with your retirement plan, and fully investigate the pros and cons of doing so.
A suitable downsize choice might be land lease communities, designed for active over-50s. At GemLife resorts maintenance outside your back fence is taken care of and amenities like pools, gymnasiums, pickle ball courts and a Country Club is onsite, meaning you can enjoy a holiday resort lifestyle while still working.
Learn more about how to downsize for retirement here.
6. What is Your Future Retirement Plan?
What does your retirement look like? Will you be spending more time with your grandchildren? Travelling or learning something new?
Just as importantly, are you prepared financially? This includes setting yourself up for the lifestyle you desire, but also considering what your wishes are for when you pass.
Your future retirement plan should consider these questions, while keeping in mind that flexibility is required in case your plans change over time. Let’s look at some of these points in more detail.
Adapting to change
If you fail to plan, you plan to fail, right? While this saying may ring true, the second key point should be that sometimes the best laid plans come undone. With no crystal ball for what the future holds, you need to factor in that you might change your mind about where you’d like to retire, or whether money you’ve saved for something might be better directed to something else as the need arises.
Maintaining social connections
Human beings are social creatures – we need social connection and to feel we belong. When you retire you gain one of the the most precious things of all: time. You will have more time to make new friends and connect with others. Where you live will be integral to that. Consider what supports you’ll have where you live, and your ease of access to your interests or even things you’d like to do/try!
Bonding with grandchildren
Remember back to being a busy parent of young children – working, preparing meals, scheduling appointments, house cleaning, yard maintenance, checking their homework (the list goes on) – all while trying to spend precious time with your offspring or even on yourself?
Once you’ve retired you’ve got more precious time which means your grandchildren can get that quality attention in spades – and they love it!
According to the National Library of Medicine, the nurturing bond between grandparents and grandchildren is likely to influence factors of child health, including the potential to reduce risky behaviours amongst teenagers like smoking and drug use and lead to better mental health for both parties.
Think of all the activities you and your grandkids can do when you retire, and the ways you provide positive enrichment to their lives.
You may like to factor some of these into your retirement plan.
Planning your legacy
With Australians living longer than ever before, you’ll you need to plan your retirement wisely – and preferably before you’re ready to hand in your notice.
Consider a budget: How will you build your income? Pay off debt? Save for emergencies?
Then make an estate plan, which is how your financial assets should be distributed after your death.
It’s important to note your super is not covered in your will, so an estate plan is important for the nomination of beneficiaries, considerations of tax implications and the financial wellbeing of your loved ones.
Such a plan also details how you want to be looked after in the event you are unable to make your own decisions.
Begin Your Retirement with GemLife
When planning for retirement, carefully consider your finances – especially your super and how you can boost it, your desired location and lifestyle, government incentives, estate planning, and your emotional and social connections too.
Downsizing is also a great option for freeing up money to pay off your mortgage or to invest and boost your income ahead of retirement. Best of all, you’ll start enjoying a better lifestyle before you’ve officially retired!
Begin a new chapter at GemLife resorts, where you can experience premium, healthy and active living in some of Australia’s most desirable treechange and seachange locations.
Resort facilities may include all of the following: ten-pin bowling ally, pickle ball court, indoor (heated) and outdoor pools, spa, sauna, gymnasium, cinema, library, resort bus and buggy, bar, coffee lounge and Country Club.
Contact GemLife today to find out more, and request your free information pack.
Information in this article is general in nature and is based on current information at the time of writing. Before making any financial decisions, seek professional advice.