Many people are so focused on their day-to-day demands that retirement planning doesn’t make it onto the to-do list. However, if you want to retire comfortably, having a clear strategy is essential.
Whether you are just starting your career or midway through it, it is never too early or too late to create a plan that reflects your circumstances and future goals.
In this article, we outline how to build a smart retirement plan that considers your current financial position, lifestyle expectations and potential risks. And you don’t have to do it alone. Working with a financial advisor on the Gold Coast can make the process more effective and achievable.
Why retirement planning matters
According to the Australian Bureau of Statistics (ABS) 2022-23 retirement data:
- 38% of people who intended to retire (around 1.7 million) did not know when they would exit the labour force.
- The government pension was the main source of income for most retirees.
- Retirement outcomes are uneven across genders. Around 18% of female retirees reported no personal income, compared with only 4% of men. Thirty-one per cent of retired women rely on their partner’s income to meet living costs, compared with 8% of retired men.
More alarmingly, in a survey by Finder, 4.3 million Australians said they can’t afford to retire.
These statistics highlight the potential consequences of delaying retirement planning. While the Age Pension provides a safety net, it typically supports only a modest lifestyle. Superannuation and other savings are usually needed to bridge the gap.
Six steps to developing a smart retirement plan
A successful retirement doesn’t just happen; it requires a clear strategy built around your goals, resources and future needs. This six-step guide outlines the key actions to create a concrete retirement plan.
1. Set realistic retirement goals
A retirement plan isn’t just about setting a dollar figure. It’s about how you want to spend your latter years and ensuring you have enough funds to support that. To determine this, ask yourself:
- At what age do I want to retire or gradually transition into retirement? In Australia, the average age at retirement is 65. If you plan to retire earlier or intend to work for longer, that shifts the goal post on the retirement bundle you need.
- What lifestyle do I want in retirement? Do you want to travel frequently, take up new hobbies, or upgrade your vehicle every few years?
- Where will you live? Do you intend to continue living in your current home on the Gold Coast, downsize to a smaller home in a more affordable state or move to a retirement community?
2. Review your current financial position
When you work with a financial planner, they will take a broad view of your finances and retirement objectives to tailor a plan according to your needs. They will want to analyse the following:
- Superannuation balances and contributions (current and projected)
- Other savings, investments and assets
- Debts such as mortgages, loans and unsecured debt
- Income and expenses
3. Identify risks
Life isn’t always smooth-sailing. Job losses, unexpected health conditions, and stock market fluctuations can all affect fund growth and retirement timing. A financial advisor can help you build a buffer into your retirement plan to absorb these shocks and work with you to adjust it after a negative event.
4. Develop an investment strategy
Your financial planner will recommend investment strategies that include diversification, inflation protection and tax efficiency, based on the following:
- Your time horizon, i.e. the years until and after retirement. Someone in their 40s will need to save substantially more than someone in their 20s.
- Your risk tolerance. Investing always comes with risk, and some asset classes are more volatile than others.
- Your income streams post-retirement. Will you pursue part-time work early in your retirement or receive rental income from an investment property?
5. Leverage government benefits
There are tax, super and other government incentives available that could bolster your retirement income. These include:
- Maximising your super contributions through salary sacrifice and voluntary top-ups, which could give you potential tax benefits.
- Applying for the Age Pension. Your financial planner can guide you through the income and asset tests, and should you qualify, adjust your retirement plan.
Keep in mind that legislative changes can impact your retirement outcomes. For example, recent changes to the Paid Parental Leave Act mean the government will continue to pay superannuation contributions on government-funded paid parental leave, helping reduce the savings gap when parents are on parental leave.
Other changes might include adjustments to contribution caps, tax concessions or eligibility rules for government co-contributions.
6. Prepare a contingency plan
A comprehensive retirement strategy also considers the unexpected, such as:
- Acquiring a health issue or requiring long-term care when you’re older
- Living longer than expected
- Market downturns or sharp inflation spikes
- Shifts in family needs or goals
How much retirement funds should you aim for?
Every individual’s situation is different, and the retirement income you’ll need depends on your personal circumstances, average annual expenses, and lifestyle.
Choosing a financial advisor on the Gold CoastHowever, the Association of Superannuation Funds of Australia (ASFA) provides a useful benchmark. ASFA estimates that singles need around $53,289 annually and couples need at least $75,319 for a comfortable lifestyle in retirement.
Choosing a financial advisor on the Gold Coast
When selecting a financial adviser for retirement planning, check that they are licensed or hold Certified Financial Planner (CFP) status. You could also look for someone who specialises in retirement planning.
Frequently asked questions
You can manage your retirement journey on your own, but a financial planner brings knowledge of superannuation, tax and investment strategies that you may be unaware of. Their expertise can help maximise your retirement savings.
While it’s best to start as early as possible so your investments have time to grow, it’s never too late to put a plan in place. Even small changes in your 40s or 50s can make a meaningful difference.
You should strive to review your plan annually. However, major life events such as changing jobs, acquiring new assets or a change in your health status are all life events that warrant a revisit of your plan.
In Australia, financial planners must be listed on the Australian Securities and Investments Commission’s (ASIC) financial adviser register.
Final thoughts
Planning for retirement is one of the most important financial steps you can take. By being clear on your goals and working with a licensed financial planner to achieve them, you can create a retirement strategy that gives you a greater sense of assurance about the future.
If you are ready to create a smart retirement plan, contact RFS Advice on the Gold Coast. Book a call with one of our experienced financial advisors.
General advice warning:
The information and any advice provided in this article have been prepared without taking into account your objectives, financial situation or needs. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to those things.
