Big Decisions to Make When You Start Investing for Retirement
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Retirement Investing

Big Decisions to Make When You Start Investing for Retirement

Retirement has fundamentally stayed the same, but many aspects shift with the moving times. There are several decisions to make when it comes to retirement planning, and they need to be well-thought-out. In this article, we will explore some of the key decisions to make when a person starts investing for retirement.

DECISION #1: Retirement – when should it happen?

After spending our entire lives working hard, many of us hope to retire early. That way, we can still spend time with our family and friends while we are fit and healthy. The pension eligibility age tends to increase as time goes on.

Will your nest egg make it alongside you with no issues?

Don’t be fooled; money isn’t the only factor to consider when deciding on retirement. It’s also a matter of feeling valued and staying connected, as retirement is a whole new world on its own. It’s possible to push on with work while drawing from your super; a transition to retirement (TTR) strategy will come in handy upon reaching your preservation age.

Transition to retirement can work in one of two ways:

  • Maintaining work hours to boost the super via a re-contribution strategy
  • Reduction of work hours while maintaining income after taxes

Either way, you will be able to start drawing a pension income from your super. However, keep in mind that a reduction in work hours will lead the super balance to fall as time passes by.

DECISION #2: What’s the best thing to do with your super?

This is easily one of the biggest decisions involving retirement that you will have to make. Years upon years of building on your super balance has come to this. Soon enough, you will be able to access and enjoy your retirement nest egg.

The preservation age is increasing much like the pension age. The government is encouraging more responsibility in its citizens to fund their own retirements. (For those born before 1 July 1960, it’s 55; anyone born from 1 July 1964 onwards is at 60.) As soon as you reach your preservation age, you will be able to take your super as a lump sum. Alternatively, you can convert your savings into a pension. That will give you a regular income.

Also, house prices are going up; if you’re approaching retirement and still owe money towards your home loan, don’t fret. You’re not alone, as many Australians are also dealing with this today. Naturally, you’ve probably thought of taking on a lump sum for your remaining home loan to be paid off before embarking on a holiday. However, it’s vital to look into long-term goals first. Investing your super in a diversified mix of assets while keeping some debt might be better.

A good rule of thumb is to figure out what discretionary and non-discretionary expenses you have when it comes to spending. Your non-super income is an ideal starting point as you figure out how to meet your spending needs.

This MoneySmart Retirement Planner can help you get started.

Are you Retirement Ready?

Retirement is an exciting time, but big decisions are still to be made. After all, it involves a nest egg built up over years of hard work. Those decisions include when to retire and the best thing to do with one’s super. Need help with retirement planning? We guide clients so that they can enjoy their dream retirement through personalised financial advice. Reach out to Coastal Advice Port Macquarie today and book your complimentary first meeting!


DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
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