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The retirement clock is ticking in 2023 for an awful lot of Aussies. If you’re among the 500,000 Australians thinking of retiring in the next five years, it’s time to seize control of these six things that will help you make the most of it.
Make your retirement dreams a reality by taking control of your finances.Credit: James Alcock
Understand your pension eligibility: Age pension thresholds shifted quite significantly on 1 July 2023, giving those eligible for the pension a bit of a pay rise and making more Australians eligible, with the pension qualification age moving from 66.5 to 67.
Sixty-two per cent of Australians aged over 67 get some form of pension right now, so it’s nothing to be embarrassed about. And it’s not just the pension payment you want to explore, the Pension Concession Card (PCC) offered to people who qualify for even just $1 of pension income a fortnight can be incredibly helpful in keeping your cost of living down.
If you aren’t eligible for the PCC, take the time to understand the Commonwealth Seniors Health Card, which is only subject to the income test at much higher thresholds than the pension.
Maximise the use of your superannuation concessions: Superannuation can seem dull to Australians whose retirement still seems a long way off. But once it arrives, those concessions become some of your best friends, so if you don’t understand them, it’s time to.
Every year you can put $27,500 into superannuation at just a 15 per cent tax rate, and for most average Australians, trying to maximise those for 10 years or more before retirement is a powerful move.
It’s one of the simplest retirement planning strategies to consider. If you can find a way to leverage this fabulous tax break, and then invest those funds for the long term, enjoying compound interest, you’ll get a lot closer to being able to have a comfortable retirement.
Properly leverage the power of time: The real power that sits behind superannuation is time and compound interest, so if you haven’t considered that, you’re missing out. The average superannuation fund getting a 7-10 per cent return on investment will double in capital value every seven to ten years. That’s the power of compounding.
The big thing here is starting to take your superannuation more seriously earlier in life. If you can possibly afford to, think about maximising your concessional contributions in your 40s and 50s, and take the time to understand how your fund is invested, to try and maximise returns with respect for your risk profile.
Rediscover what drives you: The years before you retire are some of your prime years. If your kids have flown the nest, and you have some of your freedom back, it’s time to re-explore yourself and start to find what brings you real happiness and joy – at work, socially and in your personal time.
Finding yourself again can be quite a significant journey for those recovering from 20-30 years of more selfless parenting. And everything can be on the table for re-discovery.
Think about your third act career: We spend the first thirty years of our lives learning how it works, the second twenty to thirty years raising kids and having a structured career (well, most of us), and the third thirty years – well, that isn’t a narrative any generation has really had before. But you do.
More than 50 per cent of people born after 1971 will live to 100 years of age. So retirement doesn’t have to mean giving up or stopping work. Instead, think about what you’d love to be doing, and how you use the financial freedoms created by retirement and superannuation to allow you to change path and explore a new career, type of work or passion.
This could become the most rewarding and enjoyable period of work in your life, but you might have to tackle some changes to achieve that.
Start practising for retirement, before you get there: If you have a little financial confidence, and don’t want to wait for retirement to start living well, why not start practising now? Many employers will support you to do so, allowing you to take longer holiday periods or sabbaticals where you can travel the world, or go and live overseas for a few months.
Or you might want to consider taking a day a week off to spend with your grandchildren while they’re young, reaping those little joys in your life while they are available.
Those are my top six powerful levers you have to help you if you plan to retire in the next five years, so make your retirement dreams a reality by taking control of them.
Bec Wilson is the author of How to Have an Epic Retirement now available for preorder and writes a weekly newsletter for pre- and post-retirees at epicretirement.net.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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