Achieve asked Jane & Chris's financial adviser, Ken Bailey of Bailey Capital Management, for his favourite tips on easing the transition into retirement
Develop interests outside work You’d be surprised how many people
feel
at a loose end after they retire. The first
month is like a
holiday. Month two, reality
sets in. One couple I know took
up ballroom
dancing before they retired. Now both well
into their seventies they’re still dancing
and enjoy healthy bodies, active minds,
and a wide circle of friends.
Keep a record of how you spend your money
Most people happily spend their salary and have little idea of how much they spend on what things. You’ll need to know this when you retire, because some expenses cease, while others continue. So you can work out exactly how much income you’ll need in retirement, start keeping records now.
After retirement
Don’t ignore Centrelink benefits
Lots of people assume they won’t qualify. With expert advice you can arrange things so you do qualify. Consider this: the full pension for a married couple is $21,226 pa. To reliably generate that income for yourself you’d need $420,000 invested. Pensioner discounts save a further $2,000–$3,000 a year.
Implement a ‘practice period’
If you have annual leave or long service leave accrued when you retire it can be used to provide a ‘practice period’ at the outset of retirement. I advise my clients to use this time to practise living on their nominated level of retirement income, before they make final decisions on how they’ll invest their super. It’s also a useful period to get comfortable with your financial adviser and your new retirement lifestyle. Wherever possible, don’t rush into big decisions!
Devise a strong financial plan
Keep some cash easily accessible for emergencies.
Make the most of specific retirement income products (e.g. term and regular allocated pensions).
To reduce tax and fight inflation always include a proportion of growth investments in your overall portfolio. But don’t expose yourself to more risk than required. Those with significant lump sums may not need as high a percentage of growth investments as they think.
Achieve is issued by Russell Investment Management Limited (RIM), ABN 53 068 338 974, AFSL 247185. In preparing this information we haven’t taken into account your own personal circumstances, including what you want and need for your financial future. It is important for you to consider these matters and also to obtain and read the relevant PDS before you decide whether to acquire or to continue to hold a product. Go to www.yoursupersolution.com.au to download a PDS. Interests in Russell SuperSolution are issued by Total Risk Management Pty Ltd.
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