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Retirement Income

Will COVID-19 change your retirement plans?

Will COVID-19 change your retirement plans?

Retirement should be a time we look forward to – when we can take a foot off the pedal and enjoy spending time with family and friends. But many Australians who had planned to retire in the coming months or even years are rethinking their options as COVID-19 has changed the landscape for retirees. 

Here are some things to consider if you are thinking about whether COVID-19 will affect your retirement plans.

Do you know how much you need to retire?

Many Australians are worried that they won’t have enough to fund their retirement, and, for some, COVID-19 has exacerbated these concerns. If this is you, it’s important you don’t put your head in the sand, because when it comes to retirement, inactivity is your enemy. 

If you are unsure whether you will have enough to retire, a great first step is understanding how much you will need in detail, because retirement looks different for everyone. It’s important to do this at a microlevel – understanding what you will need for everything from phone bills to medication and entertainment. This way you can put a more realistic, detailed plan in place, looking at how you can build your retirement funds and/or make small lifestyle changes to meet any shortfall.

Have you structured your super to weather financial storms?

Many of us intend to rely on our superannuation during retirement, yet, according to the Australian Bureau of Statistics, 49% of retired men and 45% of retired women in Australia rely on the Age Pension as their main source of income. 

COVID-19 has impacted global financial markets and, therefore, superannuation balances for many Australians. While these types of events are often referred to as being ‘once-in-a-lifetime’, the reality is that financial downturns can and do happen many times throughout our lives. 

The good news is that you can structure your super to weather financial storms – and it’s not too late to take a look at how yours is structured. There are many strategies to do this, and the right strategy for you will depend on your life stage and goals but maintaining a separate cash component can be an effective protection. 

Many people don’t consider doing this because it doesn’t present as much in the way of short-term growth, particularly with today’s historically low interest rates. But what it does do is allow you to continue generating an income stream while the rest of your super remains invested in growth assets, as well as providing the opportunity to make moves at the right time. Speaking to a trusted financial planner can be a great way to develop a super strategy that’s right for you and helps you protect and grow this all-important asset.

Have you prepared for the emotional transition?

Helping so many Australians with their retirement, we see the importance of planning for the emotional transition every day. And, in our experience, it’s almost, if not as, important as the financial one.

Essentially, it’s about planning how you will spend your time, as you will find yourself with more free time on your hands than ever before. It might sound wonderful, and to most it does, but the reality is that the time can be hard to fill. Without planning for it, it can quickly become a negative and can even lead to mental health issues, such as loneliness or depression.

In the current climate, particularly for those in Victoria, restrictions on travel, social activities and contact with others can make this transition even more difficult. Many retirees plan to spend more time with family, see the world or pick up new hobbies, much of which simply isn’t possible right now.

It might be worth considering whether you continue to work until the situation improves, bringing in an income and topping up your super. This way, you will have a little more money in your pocket and can start living the retirement you want when restrictions lift.

Have you considered a transition-to-retirement strategy?

If you can’t or don’t want to retire in the current climate, it can be disappointing, particularly if you had already set a date. One way you can start the process without cutting off your income entirely is by looking at a transition to retirement strategy (TTR). A TTR allows you to continue working, reducing your hours, while starting to draw on some of your super.

This way, you can take a proactive step toward retirement while still keeping an income coming in to cover your living expenses, topping up your super and potentially reducing your tax liability.

Are you ready to stop thinking and start planning?

If you are ready to get serious about your retirement, our eight-step roadmap can help you understand every aspect of retirement – from the financial to the emotional – so you can start planning for your dream retirement.

Download it free here.

If you aren’t receiving financial advice, it’s a good time to start a discussion. The right financial adviser can help you decide on your next steps, ensuring you can live for today and plan for tomorrow.

If you are thinking about retiring but are unsure of your next step, register for our free retirement planning webinar to find out how you can put yourself in the best possible position to live the retirement you deserve.

General Advice Warning

The information provided in this article does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.

Written by Andrew Dunbar, Director and Senior Financial Adviser, Apt Wealth Partners, this is a sponsored article produced in partnership with Apt Wealth Partners.