Are you retirement ready?

Typically the phrase ‘swinging sixties’ refers to an era of peace-loving hippies and rebellion against the establishment. However it’s recently taken on a new meaning for this very generation, now aged in their sixties and seventies. So what’s swinging? The share market, of course.

The right time to retire?

The current economic climate has made retirement a far more daunting prospect for a lot of people. “The swinging share markets are the biggest issue facing potential retirees today,” explains Gerry Lenihan, Certified Financial Planner. “Shares were massively down as a result of the Global Financial Crisis (GFC), then up over the last year as markets recover. The hardest issue is to stick to your original investment strategy when things are changing in short to medium time frames.” So with all this uncertainty, when is the ‘right’ time to retire? And for those not yet thinking about retirement, what can they be doing to ensure a smooth transition?

5 questions to ask if you are thinking about retiring

  • How much will I need?  “Asking, ‘how much net income do I need to live when I can’t work anymore?’ is a good start,” says Gerry. The emphasis on net income is important – make sure you take into account how much will be required for taxation and other costs.
  • What is my expected time in retirement with no income from work? While no one can accurately predict how long they’ll be around after retirement, it’s important to have an approximate idea of how many years you need to support yourself for.
  • How much difference will it make if I retire at 55, 60 or 65? Gerry recommends thinking about the impact that your retirement age will make on the amount you need to retire. For example, if you retire at 55 that’s not only ten extra years you need to account for, but ten less years of earning money. “A good Financial Planner can runs scenarios on you retiring at different ages,” says Gerry.
  • Should I work part time? “Working 1 or 2 days per week can make a big difference to the amount you require when you enter retirement,” Gerry explains. Talk to an adviser about how earning will affect your retirement funds and your tax liabilities.
  • Do I anticipate requiring lump sums? Gerry advises considering those big ticket items you have planned for your retirement – that new car, the overseas trip you’ve always wanted – and making sure you budget for them as well. After all, retirements are to be enjoyed!
When it comes to planning your retirement, it’s never too early to start. “The earlier you plan for retirement, the easier it is,” says Gerry. “Start young!”