Did you know that the average Australian will spend 15 to 20 years in retirement? According to the Australian Bureau of Statistics, the average age people look to retire at is 65.5 years and the nation’s life expectancy is 81.2 for men and 85.3 for women.
That’s a lot of leisure time! So, what are your plans?
We look at five great reasons why retirement planning is important.
5 Reasons Why Retirement Planning is Important
Making retirement plans are worth it and doing so before you give up work gives you the opportunity to really consider long-term goals.
They might include big holidays overseas, paying off the mortgage and having some more money in the bank. Activities might also figure on the list – how about improving your golf swing, spending more time in the toolshed or returning to favourite crafts, sports or hobbies.
If you haven’t already considered your retirement plans, the best time to start is right now. Here’s why:
1. Financial Security
When people think about retirement planning, they think about the financials – and no surprise! Going from a regular pay packet to relying on the pension, superannuation and the savings you have in the bank requires careful management.
Budget
One way to start is by preparing a budget and sticking to it, to give you an idea of your spending habits and how much money you’re going to need in retirement. Whatever that figure is, the good news is that you’re likely to be spending less of that in retirement.
According to the Grattan Institute, Australians start spending less after the age of 70 – mainly because the mortgage is paid off and there are no more children’s or work-related expenses.
They also cook at home more and get discounts on other household expenditure items such as medicines, utilities and vehicle registration.
Downsizing considerations
Depending on the age of your family home, there might be one expense that goes up, and not down, and that is the cost of maintaining a larger house and garden – not to mention the time it takes to upkeep! So, it’s no surprise that downsizing to a more manageable property also factors in retirement plans.
Selling the family home for one which is more rightsized can also release financial capital that can be added to your retirement nest egg.
In fact, to encourage older Australians to downsize, the Federal Government has implemented added incentives such as reduced deeming pension rates, and the ability to add a portion of the proceeds from the sale of your home to your superannuation.
Before you make the decision to downsize, it is important to look at what retirement living options are available. You will be looking for a lifestyle community that doesn’t charge fees such as entry, exit, deferred management and capital gains.
Learn more about downsizing in retirement for pensioners here.
How much do I need?
What a comfortable retirement looks like to you will vary depending on your plans.
But what does that look like in dollars and cents terms? The Federal Government’s Money Smart website suggests that you’ll need about 67% of your pre-retirement income to enjoy the same standard of living in retirement.
As always, we recommend that you speak to trusted legal and financial advisors and consider your own personal circumstances and goals.
2. Getting a head start
In the end, the purpose of planning for your retirement is to give you peace of mind. And that means taking into account some of the unexpected things that life can throw your way.
The good news is that you can prepare for some of these things. That includes doing an audit on your health to reduce the risk of preventable illnesses or injuries that might hamper enjoyment in your retirement.
Improving your fitness, alongside your finances, today is something that ‘future you’ will thank you for.
However, you don’t necessarily have to wait until you’ve retired to begin reaping some of the financial benefits of a lifestyle shift.
Land lease over-50s lifestyle resorts are proving popular even for those people who are a good ten to 15 years away from the retirement age. Land lease communities have a great range of amenities such as sports facilities, gym, pool, private cinema, lounge and bar. This means your everyday living expenses are much less.
GemLife over-50s lifestyle resorts also offer substantially reduced energy costs through its Australia-first Virtual Power Plant program where homeowners pay $8 a month in electricity and in some cases receive no bills at all.
Reducing your living expenses and increasing your lifestyle while you’re still working gives you more opportunities to enjoy a great lifestyle.
For Mark and Kym, a couple in their early 50s, leaving the rat race of Sydney for the relaxed beachside lifestyle of GemLife Rainbow Beach made perfect sense
“We decided to look at over-50s lifestyle resorts sooner, rather than later, because we wanted the lifestyle,” said Kym. “Thinking about our seven-year plan, we thought we might wait until stage three before we bought (at GemLife), but Mark and I looked at one another and said to ourselves, ‘why on earth are we waiting?’ and we put down a deposit for the stage under construction.”
Jenny from GemLife Woodend finds working from home ideal.
“The company I worked for recently relocated and that changed my commute from 25 minutes to more than two hours away, but I’ve been fortunate to be able to work from home,” she said.
“I’m also recovering from an injury so another great thing about living at GemLife is the ability to follow my physiotherapist’s rehabilitation exercises in the pool at lunchtime.”
3. It Lowers Stress
It sounds obvious, because it’s true – concerns about finances bring stress and negatively impacts on your mental health.
Research conducted by ASIC and Beyond Blue found that about five percent of Australian adults experience both financial hardship and mental health symptoms each year.
Taking control of your finances is the first step to reducing that stress. Start with a budget and develop a better understanding of your lifestyle expenses and spending habits.
The rule of thumb is that retirees can withdraw between three and five percent of their superannuation balance each year without running out of money. And there’s more good news: when you hit retirement age, your superannuation achieves better performance through compound investing.
This is why it is so important to act early to get your financial affairs in order. Knowing what you can budget for now and into the future gives you peace of mind so you can really enjoy those post-work lifestyle years.
4. You Can Enjoy Your Lifestyle
Work now and play later… this applies to your retirement planning too.
Planning for your retirement is not all about the money – although it is a large part of it. It is important to keep in mind what you’re working towards.
What type of lifestyle do you want to lead in retirement? How do you intend to spend your time and what do you need to make it happen? Taking the time to answer those questions will help put your plans into sharper focus – not to mention being a whole lot of fun. Guidebooks like How to Have an Epic Retirement are designed help people navigate this stage of life, allowing you to lead a better quality life.
Whether your plans include saying farewell to work, or keeping your hand in part time, your retirement goals should centre around maximising your lifestyle with time devoted to activities you most enjoy doing. In fact, there are plenty of retirement activities you can enjoy that best suit your lifestyle.
Rightsizing to a land lease over-50s lifestyle community like GemLife also comes with the bonus of resort-style facilities at your doorstep for that ‘just gone on holidays’ feeling every day.
When Ann and Harry moved to GemLife Woodend they were captivated by its magnificent Country Club.
“Oh, my goodness! Once we saw the clubhouse we were hooked. It is amazing. My son said it was like walking into the dining room of a luxury cruise ship,” Ann said.
“We are there almost daily enjoying the first-class facilities which have to be seen to be believed.
“Harry uses the golf simulator and the spa, and I enjoy aqua aerobics and Pilates and, as an avid reader, I am frequently borrowing new books from the club’s library. Our grandchildren just love the pool and ten-pin bowling when they come to visit too. We also catch up with neighbours and friends each Thursday for a drink at the bar.
“There is just so much to do at this beautiful country club which also includes a luxury cinema, art and craft studio, games and entertainment room, bocce court, sauna, gymnasium and a wine room. The lights at night are just spectacular too.”
Being in a community of likeminded people means there is always friends to catch up with, hobbies to re-engage with and new experiences to try.
Living at GemLife Highfields has given Christine the opportunity to do the things she’s always wanted to do but has never had the time or encouragement to pursue.
“Painting is something I’ve always wanted to try but I never thought I had any aptitude for it, but everyone here is lovely and encouraging. I’ve improved! Now what I’m drawing looks like the subject I’m trying to draw!” Christine laughs.
“My sister asked me recently how I was getting on living at GemLife Highfields, and I told her that I’m busier now than before I retired!”
For other people, their goal is to look further afield and explore the world.
Freedom to travel without worrying about home security or maintenance is a top perk of living at GemLife Bribie Island’s gated, secure over-50s lifestyle resort, according to keen travellers Andrew and Carol.
“One of the best things about living here is being able to lock-up and go with no worries. It makes travel easy,” said Andrew.
The couple, originally from Scotland, moved into GemLife Bribie Island where travel has become a big part of their new lifestyle. The pair have enjoyed a month-long European vacation which saw them travel to Edinburgh and Ballater in Scotland, Portugal, Italy, including the Amalfi Coast, and Spain.
Learn more about how to travel (cheap) in retirement here.
5. You Can Plan Your Legacy
Planning now for future inevitabilities is a wise move. What contingencies do you have in place should you no longer be in the best of health? What legacy do you intend to leave to the kids or grandkids?
If you don’t already have a will, then it is important to make one now to ensure your wishes are followed regarding treasured items and the distribution of your assets, including your home.
The home is generally the most substantial asset you will have, and you might be considering the proceeds of your downsized home might go towards funding more advanced care in later years or will be part of the legacy you leave to the family.
This is where doing your homework is very important. In retirement villages you are up for costs such as exit and deferred management fees and even capital gains and refurbishment fees. This takes a substantial portion of the sale price of your home which can leave you with much less than you were banking on.
This is why it’s worth looking at land lease over-50s lifestyle communities. They differ from retirement villages in that the homeowners are generally much younger and active. They also have much less complex contracts: you own your own home and simply lease the land it is on. There are no exit or deferred management fees, nor are there any capital gains or refurbishment fees.
Learn more about the costs of retirement villages here.
Begin a Whole New Life with GemLife
There is a lot to consider as you approach retirement and it’s never too early to start having those discussions.
Planning for your retirement today has a lot of advantages and, as you do your research, you may discover things you may not have considered, such as how the sale of your large family home can be used to bolster your retirement lifestyle.
Whether your plans are around having more ‘me time’, being more involved with family, socialising with friends or lots of travel, GemLife offers a whole new life for active over 50s.
GemLife is one of Australia’s fastest-growing over-50s lifestyle resort operators, with 10 communities across Queensland, northern New South Wales and Victoria, and more in the pipeline.
For more information, reach out to our specialist team or request an info pack.