A question you may have as you start to think about retirement is “how much money do I need to retire happily in Australia”? This is a very difficult question to answer and is most often a guess and yet, the starting point for almost all retirement planning.
Most retirement planning commences by asking the wrong question about money
The right question to ask when commencing to plan your retirement is ‘how can I maximise my return on retirement and live a long and happy life?
To find out what your money is for and how you can maximise your return on retirement, you need to explore what you will do when you retire and then you can calculate how much money you will need to retire and live a long and happy life.
You can have a long and happy retirement by finding out how firstly you can maximise your return on retirement for the following reasons:
- Retirement Financial Security
Having financial security is an important part of planning your retirement and part of our process. However, if you are not happy and enjoying retirement, your financial security will soon become irrelevant.
The financial impact of commencing retirement without proper planning of the non-financial side of your life will soon derail all the best financial retirement planning strategies.
- Retirement Calculator
To calculate how much you need for retirement, you need to first understand what you will be doing in retirement so that you can the cost that lifestyle.
Your lifestyle cost is often not just a simple number based on the best guess and requires an understanding of what you would like to be doing at different phases of your retirement.
- Retirement Planning Goals
To expand your thinking about what you will do in retirement firstly review key lifestyle areas such as shown in the image below. This will help realistic financial goals that enable you to live this desired retirement lifestyle.
By using a process to explore these lifestyle areas, you may see opportunities, for this phase of your life in a new light and be able to fulfill areas of your life that would otherwise never be realised.
- Retirement Relationships
You and your partner will be together a lot more of the time in retirement and it is important to jointly explore what your ideal retirement would be like and consider what you would like to do jointly and apart.
Once you have been through this process and decided upon how you will be able to enjoy this next phase of your life, you will have the basis for costing your retirement and deciding how much money you will need for retirement.
- Retirement Transition
Retiring is a life transition event rather than an event in itself. As with all major transitions, they require careful planning before, during, and after not only the financial impact but also the mental and emotional impact of the transition.
Various decisions are to be made that will have a financial impact and without proper consideration, mistakes can be costly and impact your ability to enjoy your retirement years. The process is ongoing as you move through different phases of your retirement and requires review and adjustment.
- Retirement Purpose
Having a sense of purpose is one of the keys to long term happiness. To maximise your return on retirement and to calculate how much you need for retirement, you will need to consider what your retirement purpose will be.
Your retirement purpose may involve working or it could be something completely different and may or may not involve a monetary reward. However, whatever your purpose will be, it is fundamental to having a long, and happy retirement.
Retirement planning should commence by asking the right question. By considering these keys to retirement you will have a better foundation to decide how much you need to live a long and happy retirement.
For further tips on how to prepare for retirement, download the attached ebook “How to live an Inspired Retirement” or listen to the “Real Life Financial Planner”, Geoff Ivanac on our retirement podcast, “Real Life Retirement Radio”.
General Advice Warning: Any advice on this site is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. You should obtain financial advice relevant to your circumstances before making any decisions.