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Preparing yourself for retirement

Retirement is the long-awaited dream for many Australians. While there is no fixed retirement age in Australia, some people choose to retire in their fifties while others work to pension age and beyond.

Last updated: January 11th 2023
You should always evaluate whether you are ready to retire before you actually retire. [Source: iStock]

You should always evaluate whether you are ready to retire before you actually retire. [Source: iStock]

Key points:

  • Take time to evaluate if you are ready to retire, both financially and mentally
  • Make sure you know where you plan to live over your retirement years, as well as a back-up option in case things don’t go according to plan
  • Try not to enter retirement with debt if possible, so you’re not draining the savings and superannuation you need to live off

If you retire at the age of 65, the life expectancy for females is 87.3 years, whereas men have an average life expectancy of 84.6 years. This life expectancy rate continues to increase as the years go on.

Peak body for older Australians, National Seniors, released research in early 2020 highlighting that many older people are worried about outliving savings.

The research showed that 53 percent of survey participants were concerned about outliving their savings and women were more worried than men (59 percent to 47 percent).

Chief Executive Officer (CEO) of National Seniors, Professor John McCallum, believes the finds really show how older Australians feel when it comes to their financial security.

“Australia has one of the best pension systems in the world, yet Australian retirees are still showing high levels of worry that they will outlive their savings,” says Professor McCallum.

“This shows a need for better advice and education to help older Australians manage their savings so they can have the confidence to spend their money and enjoy retirement.”

While it’s important to plan your retirement financially, you also need to have an overall view of what you want your retirement to look like and what you want to be doing during this new period of your life.

This could include travel and other big expenses, whether you want to lead a modest or comfortable lifestyle, when you want to retire, whether you are wanting to stay at home, downsize or move into a retirement village, and implementing all your estate planning.

Are you ready to retire?

Wanting to retire is different to actually being able to retire. Older people tend to have a set age they want to retire, but is that viable for you?

The preservation age in Australia for retiring is from 55 – 60, which is when you can start accessing your superannuation, but you cannot receive the age pension until you are at least over 66 years of age. Does that align with your current retirement wealth?

What about the lifestyle you want to lead in retirement? The Association of Superannuation Funds of Australia (ASFA) developed Retirement Standard benchmarks to help older people gauge how much they may need a year to live modestly or comfortably in retirement.

For instance, based on current rates, to live a comfortable lifestyle as a single person, you would need $43,687 a year, or $61,909 as a couple.

Or to live modestly, a single person would need $27,902 a year, and a couple would require $40,380 a year.

These numbers are also based on the idea that you already own your home, no mortgage, and are in good health.

Manage your expectations for retirement between what you want and whether that is actually possible to achieve.

Accommodation now and into the future

Another important consideration is what your home situation will be like for the first decade or so into retirement, and how that may look when you become more frail.

Do you intend to stay at home and receive care inside your own house? Does a retirement village seem like a better lifestyle fit for yourself? Or do you want to move into an aged care facility when you need a higher level of care?

These are big decisions you need to think about. It means you may need to consider downsizing your assets or possessions, or relocate for a sea change or move closer to family.

While it can be a bit distressing, downsizing may also be a great way to boost your superannuation or savings. You can read more about downsizing in our article ‘Downsizing and moving into a retirement village‘.

Make big decisions earlier rather than later, as you don’t want to be downsizing and relocating last minute after a crisis hits and the choice is taken out of your hands.


In 2019, the Australian Housing and Urban Research Institute (AHURI) found that nearly half of people between the ages of 55 – 64 were still paying off their mortgage, and that the average mortgage debt had increased by 600 percent over the last three decades.

A financial advisor will always recommend you enter retirement with as little debt as possible, and preferably no debts at all!

This debt can include:

  • Mortgages
  • Credit card repayments or loans
  • Car loans
  • Student loan debt (if you went back to university as a mature aged student)

You are always in a better position if you don’t have debt following you into retirement, otherwise, you will end up cutting into your superannuation and reducing how long you can live on your super.

Big expenses

Besides financing the day to day, it’s important to consider if there are any big expenses while you are in retirement and to plan for those.

Many people want to enjoy their retirement and live comfortably, so big expenditure may be likely, for example:

  • A new car
  • Caravan or a boat
  • A massive overseas trip or multiple smaller trips each year
  • New hobbies or interests
  • Deciding to go back to university or undertake a course
  • Upgrading your home
  • The finer things in life (new tv, latest computer or gadgets)
  • Buying a new home or moving into a retirement village

It may be worth considering whether you can make big purchases before you retire or if it’s best to wait a while. A financial advisor can help you work through the best options for you.

The more you can prepare for any big expenses while you are retired, the easier it will be on your superannuation. It’s ideal not to draw on your superannuation for those big expenses at all if you can help it.

Foolproofing your retirement

The best way to ensure that your retirement is going to be as foolproof as possible is to make sure you have appropriate estate planning in place and have all of the relevant insurance you would require to protect your assets, including yourself.

What insurance do you have in place to protect yourself and your family? Life insurance, funeral insurance, health insurance, contents insurance: all these insurance types can safeguard you from any expected or unexpected instances.

Having insurance is really important as you get older, particularly health insurance, because as you get frailer, you are likely to have expensive medical bills stack up.

Whereas, life insurance can be really beneficial to your partner or family, as you can add on additional features to your policy, like total and permanent disability cover or trauma protection. You can usually add on funeral insurance when organising your life insurance as well.

Once you pass away, if you don’t have funeral insurance, your family will need to cover the cost. An average Australian funeral in Australia costs around $15,000, but having funeral insurance will likely cover most of the big expenses at your funeral.

Estate planning, another vital part of foolproofing your retirement, helps protect your assets and makes sure they are distributed how you wish after you die.

Not only that, estate planning can include all the relevant documentation for Enduring Power of Attorney or Guardian, your Advanced Care Directive, and your Will.

Estate planning can be really important for yourself first and foremost, to be treated with dignity and respect as you become more frail, but also provides your family with guidance during future difficult events.

Additionally, insurance and estate planning is the best way to secure your retirement plan so you don’t have to worry about any unforeseen life changes.

You can read more about estate planning in our article ‘Creating a strong estate plan‘.

All the information in this article is generic in nature and it is recommended to seek professional advice.

How have you prepared yourself for retirement? Tell us in the comments below.

Related content:

Finding purpose in your retirement
Journey into retirement and how life might change
Transitioning into your retirement life


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