Understanding the basics of retirement

When working out how much you’ll need in retirement, you will firstly need to consider how long you may live. 

It’s estimated that the percentage of people over 60 will more than double by 2050*. The ageing population is a reality that is currently challenging governments and individuals. It means we’ll need to take on the responsibility of funding at least part of our retirement.

*Source: World Population Ageing 2013, United Nations

Retirement is generally about making a lifestyle change. Some people may continue to work part-time, in semi-retirement. Others may want to stop working completely and spend time on their hobbies, travel, or doing community and voluntary work. 

You need to calculate when you can afford to retire and whether you can afford to do what you want to do in retirement. 

Some questions to ask include: 

• When will I retire? 
• What will I do in retirement? 
• How much money will I need to do the things I want to do? 
• How much do I currently have in savings for retirement? 
• Will it be enough? 

For many people retirement is as much an emotional issue as it is a financial one. Quite literally, an old way of life has ended and a new way of life is beginning. Some of us underestimate how important our work is in so many ways. Apart from providing us with income, it also gives us a sense of status and identity, as well as companionship. 

So before you retire you should take stock of your personal development and set some meaningful activity goals. After all, like any project, planning for retirement is all about setting S-M-A-R-T goals. 

• Specific: so that the goal is clearly defined 
• Measurable: so you know when you have reached your goal 
• Achievable: the goal must be possible, or you will only become frustrated 
• Relevant: it must be your goal, and should be in line with other things you want to achieve 
• Time-based: you need a timeframe for achieving your goal 

Remember, whatever your goals are, if you’re clear about your destination, you’ll have a much better chance of getting there. 

To help you determine how much you may need for retirement, the Association of Superannuation funds of Australia (ASFA) has created the ASFA Retirement Standard. This benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years. 

After determining how much you may need for retirement, it is then important to review your current financial position to see how close you are to your goal, and how far you have to go.  

Log into your account to find our retirement income simulator and determine if your super, other savings, and the Age Pension will be enough to give you the income you would like to have when you retire. Note: these are designed for members with accumulation accounts.