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How long will my retirement last?

Retirement is something we all look forward to. Yet so much of it is shrouded in mystery - like when you might get to enjoy it, and whether your financial resources will stretch the distance.


Answering five key questions can help to demystify your retirement.

1. How long will you be in the workforce?

You may relish your career and have plans to work indefinitely. Or you might be aiming to hang up your work boots as soon as possible. However, redundancy or ill health could see you leave the full-time workforce sooner than you expected.

If that happens, your retirement savings may have to last considerably longer than you originally anticipated.

2. What are your plans for retirement?

For some of us, retirement is a time to live it up with overseas travel, fine dining and a chance to indulge in expensive hobbies. For others, a great retirement is defined by simpler pleasures like bushwalking or casting a line at the local beach.

The fact is, there’s no ‘right’ retirement lifestyle. It’s all about what matters to you. But whether you can achieve your personal retirement dream, at a time you decide is right for you can hinge on the financial resources you’re able to tap into including the age pension, super or other investments.

3. What is your likely life expectancy?

None of us likes to consider our own mortality but the reality is that your life expectancy plays a role in how long your retirement funds need to last.

Happily, life expectancy is rising in Australia. That said, your family history and lifestyle can shape your personal life expectancy.  Some families seem to be blessed with genes that ensure a ripe old age, others less so.

Your likely life expectancy is something to address as part of your retirement plans, and a Mortgage Choice financial adviser can help you work through a range of different scenarios to better understand this.

4. What sort of legacy would you like to leave behind?

You may fall into the ‘SKIER’ (‘spend the kids’ inheritance’) camp or you may have strong views about leaving behind a legacy for your children, grandchildren or other loved ones.

Making early plans for your estate is worthwhile. It can help you decide how to allocate your wealth in retirement between assets to draw on – and assets to preserve.

5. Do your investments allow for a long retirement?

Many of the factors we’ve looked at so far involve an element of uncertainty. One issue you can take the reins of is the way your savings and investment choices reflect your retirement expectations.

Cash-based investments, for instance, will deliver stable and safe returns – though usually with little to no capital growth. Growth assets (like shares) on the other hand have, historically, generated long-term capital growth with ongoing returns such as dividend income that is lightly taxed. The mix of assets specific to your situation can make a big difference when it comes to retirement.

There’s no single ‘right’ strategy

Just as with your retirement lifestyle, there’s no one-size-fits-all solution about how your retirement savings should be invested.

Similarly, the way you build funds for retirement is a very personal issue – one that hinges on your income, family situation, age and lifestyle, and how you feel about risk.

What matters is that you develop a plan of action – both to prepare for and manage, your retirement in a way that allows you to enjoy your lifestyle today and relish your life after work tomorrow.

The good news is we are well placed to help you shape those retirement plans. Contact your local Mortgage Choice financial adviser today for tailored advice based on your unique situation. 

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