Are You Ready to Stop Working?

Choosing a retirement date involves more than reaching a particular age.

Before leaving work, you may want to understand whether your assets can support your preferred lifestyle and what may happen under different circumstances.

You may be asking:

• Can I afford to retire now?
• Would working for another year or two improve my position?
• Should I retire fully or reduce my hours first?
• Is there a particular time of year that’s best to retire?
• How will I replace my salary?
• Should I pay off my mortgage before retiring?
• Will my money last throughout retirement?

Financial modelling can help test your proposed retirement date and compare it with alternatives.

For example, you may want to compare:

• retiring this year or in two years;
• stopping work completely or moving to part-time hours;
• paying off debt or retaining more cash;
• drawing different levels of retirement income.

The purpose is not to predict the future perfectly. It is to help you understand the likely effect of your options before making a major decision.

For broader advice about building your long-term retirement strategy, visit our Retirement Planning Brisbane page.

What to Organise Before Your Final Day at Work

1. Confirm Your Retirement Date

Your preferred retirement date should be tested against your financial position rather than selected in isolation.

We can help you consider:

• your superannuation and investment balances;
• outstanding debt;
• expected retirement spending;
• future contributions if you continue working;
• your eligibility to access superannuation;
• possible Age Pension eligibility;
• large planned expenses;
• the effect of retiring earlier or later.

Sometimes the modelling confirms that the proposed date is achievable. In other cases, working slightly longer, reducing hours gradually, adjusting spending or making additional contributions may improve the sustainability of the plan.

2. Understand Your Superannuation Options

Reaching retirement does not automatically mean every superannuation option is available in the same way.

Access generally depends on factors such as your age, employment status and whether you have met an applicable condition of release.

Before making changes, it is important to consider:

• whether you can access your super;
• whether you intend to withdraw a lump sum or establish an income stream;
• whether some money should remain in accumulation;
• the tax and investment implications;
• how your choice may affect future flexibility;
• whether beneficiary arrangements remain appropriate.

We can help you review your options and incorporate them into your broader retirement strategy.

3. Establish Your Retirement Income

One of the biggest changes at retirement is moving from regular employment income to income funded by your accumulated assets.

Your retirement income may come from:

• superannuation pensions;
• cash and term deposits;
• shares and managed investments;
• investment property;
• business or trust income;
• part-time employment;
• government entitlements.

The right structure will depend on your assets, spending, tax position, goals and tolerance for risk.

We can help you consider how much income you may need, which assets should fund it, how much cash to retain and how withdrawals may affect future balances.

4. Consider an Account-Based Pension

An account-based pension may allow eligible retirees to receive regular income from their superannuation savings in a tax-effective manner.

Before establishing one, you may need to consider:

• how much super to transfer;
• how much income to draw;
• how the account will be invested;
• whether money should remain in accumulation;
• minimum withdrawal requirements;
• your need for lump-sum access;
• beneficiary arrangements;
• the effect on government entitlements.

An account-based pension should be coordinated with your cash reserves, investments and wider retirement income strategy.

5. Create a Cash Reserve

Retirement income should not depend entirely on selling investments whenever an expense arises.

Holding an appropriate cash reserve may help cover:

• regular living costs;
• home repairs;
• vehicle replacement;
• medical and dental expenses;
• travel;
• family emergencies;
• periods of investment-market weakness.

Too little cash may force you to sell investments at an inconvenient time. Too much cash may reduce long-term growth and purchasing power.

The aim is to find a balance that supports both short-term security and long-term sustainability.

6. Review Your Investments

Your investment strategy may need to change when you move from building wealth to drawing an income.

However, retirement does not necessarily mean removing all investment risk. Retirement may last for decades, so part of your portfolio may still need to grow and help manage the effect of inflation.

We can help you review:

• your mix of growth and defensive assets;
• diversification;
• expected income needs;
• cash and short-term reserves;
• your comfort with market movements;
• which assets may be used for withdrawals.

7. Plan Your Early Retirement Spending

Retirement spending is unlikely to remain exactly the same every year.

Many people expect to spend more during the early years on:

• travel;
• hobbies;
• dining and entertainment;
• renovations;
• vehicles;
• helping children or grandchildren.

Your plan should distinguish between regular expenses, discretionary spending, large one-off purchases and future health or care costs.

This provides a more realistic picture than relying on one annual figure indefinitely.

8. Consider the Age Pension

The Age Pension may provide part of your income when you retire or become available later as your circumstances change.

Eligibility can depend on factors including:

• age;
• residency;
• income;
• assets;
• relationship status;
• home ownership.

We can help you consider how possible entitlements may fit into your retirement projections and income strategy.

9. Decide What to Do With Debt

Some people commence retirement debt-free. Others may still have a mortgage, investment loan or other commitments.

Before using superannuation or investments to clear debt, it is important to consider:

• the interest cost;
• the effect on your retirement capital;
• ongoing repayments;
• access to emergency funds;
• possible tax consequences;
• your preference for certainty.

Repaying debt may reduce retirement expenses, but using a large amount of capital can also reduce future income and flexibility.

10. Review Your Estate and Beneficiary Arrangements

Commencing retirement is also a good time to review whether your financial and estate arrangements still reflect your wishes.

This may include:

• your Will;
• enduring powers of attorney;
• superannuation beneficiary nominations;
• pension reversionary arrangements;
• jointly owned assets;
• trusts or business interests.

Legal documents should be reviewed by an appropriately qualified legal professional. We can work alongside your solicitor and accountant to help coordinate the financial parts of your retirement strategy.