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The questions you need to answer before retirement

Money Tips

1. How much money do I need to retire?
The first thing to get a good gauge on, says Louise, is the amount of money you need for retirement. After all, if you don’t have enough you won’t be able to retire in the style you may be accustomed to and want.

“Many of our clients don’t necessarily want to draw down all their money as they are concerned about the unknown. They may need extra money in the future for a nursing home placement, an emergency or for their children. So, for example, if someone had a million dollars and they were drawing $50,000 from it, that’s five per cent of the capital value, so that’s a comfortable range.”

In the planning stage, it’s vital to know what your cost of living is, and what you want it to be in retirement.

“If you can understand this, 10 years before your retirement, you can have real clarity on what you need to do,” Louise says. “It may be that, over the next 10 years, you need to reduce your living expenses to enable you to afford to retire.”

A common guide for retirement is that you need approximately 80 per cent of your work-life living expenses, as you’re not having to buy work clothes and pay for your commute to work, says Louise. However, this comes with some caveats, which we’ll explore in point three.

2. What’s my transition strategy?
Stopping work and living a life of leisure in retirement may sound idyllic, but the reality can be quite a different story. New retirees can often struggle with the void left by not going to work and can suffer from a perceived lack of purpose and self-worth.

“The most effective way that I have found for clients to transition into retirement is to retire from full-time work, and then work for two or three days per week contracting or working part-time,” says Louise. “If you can pick up another five years working a couple of days a week, it really helps that transition. The majority of people find it very difficult to stop from full-time work and do nothing.

“I know it sounds wonderful being retired, but it’s still a lot of time to try and fill in. So, it’s about trying to re-shape, re-frame, re-design the next stage of your life.”

3. What’s my budget?
You’ve worked out your living expenses, and have your transition plan in place. Now comes the day-to-day reality of being retired. And it’s a reality that, if you’re not careful, can be fraught with danger.

“In the first 12 months of retirement, in particular, you’ve got this scenario in which people have got more time on their hands,” observes Louise. “And they can very easily spend that time travelling more, going to the shops more, going out for more coffees, going out for more lunches.

“I had a meeting with a client the other day, and in the first 12 months of their retirement, they have had a spending blowout! We looked at the numbers, and they realised they just couldn’t afford to continue spending at the same level.

“You need to set a budget, and stick to it – because there aren’t too many opportunities to go back and top up your super balance if you spend too much once retired.”

4. What’s my salary?
A salary after you’ve retired? That’s correct. To help you stick to your budget, Louise advises continuing the income pattern you’ve been used to in employment.

“I think the easiest way to financially transition into retirement is to pay yourself from your superannuation funds in a similar way to when you received your wages. If you were paid monthly get paid monthly from your super or fortnightly if that was the case and live off it as if it is a wage.

“Whatever you do, don’t dip into it as if it’s a big pot of gold. Pay yourself a wage, spend and save from that amount of money.”

Planning for retirement can be a daunting time. The team at Crystal Wealth Partners have expertise in planning financially and mentally for the transition out of work. To speak to one of our team, call 02 8599 1790 or email

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