For many of us, the idea of retirement finances can feel as complex and frustrating as a Rubik’s Cube. It’s a puzzle with many different sides and components that you have to twist and turn until they all align. You’re trying to juggle your Age Pension, super, work income and any other investments you have, all while trying to answer big questions like “How much can I spend?” and “How long will my money last?”
The many facets of retirement
Just as a Rubik’s Cube has many facets, so too does retirement planning. Each side of the ‘retirement cube’ represents a crucial component, and they are all interconnected. The major ones include:
- Superannuation: Your personal retirement savings.
- The Age Pension: Government-provided support for eligible retirees.
- Other investments: Any additional assets you’ve acquired.
- Housing: Your living situation and its financial implications.
- Retirement goals: What you hope to achieve and experience in retirement.
- Life expectancy: How long you anticipate you will need your savings to last.
The goal is to find a solution that makes you feel comfortable and secure about your retirement future.
Common questions and concerns
Many people embarking on their retirement journey share similar concerns. They often ask:
- How do all these different pieces, like my super and the Age Pension, fit together?
- Will I be okay?
Retirement Essentials’ most recent work with clients with our Retirement Readiness tool has shown that the most common advice questions and needs are centered around:
- Running out of money – no one wants to do that
- Centrelink entitlements – getting them/getting the most from them
- Starting an Account-Based Pension – how to convert your super into an income stream
- Estate planning – often related to getting beneficiaries right
- Setting retirement goals – working out whether you’re on track
- Superannuation contributions – how to maximise your super
Nicole Bell, an adviser at Retirement Essentials, helped put the puzzle pieces together for Joseph and Robyn. In their late 60s, the couple had been retired for a few years and had never made any changes to their super as they weren’t sure how it might affect their Age Pension entitlements. They didn’t understand how all of the puzzle pieces of retirement could fit together, so they just hadn’t been able to take any action at all out of fear of doing the ‘wrong’ thing. They have been getting by making occasional withdrawals from their super as Joseph’s part Age Pension alone is not enough to meet their needs. They had heard of an Account-Based Pension, but worried if they were forced to take a regular income they would lose some Age Pension benefits.
Here is the puzzle that confronted them:
How do you:
- access your super to supplement retirement income, while
- maximising Age Pension entitlements, and
- feel confident you are invested in a way that makes it likely your desired spending levels are sustainable throughout retirement?
All four aspects of the puzzle – age pension, superannuation, investment choices, and spending levels – may have a hand in how you optimise your retirement. There are more puzzle pieces, but these were the ones we were putting together for Joseph and Robyn in a Retirement Advice Consultation.
In Joseph and Robyn’s case Nicole encouraged them to consider an Account-Based Pension for Joseph, which increases their regular cash flow and makes it much easier to manage their recurring expenses. We suggested they keep Robyn’s super where it is, as making changes had the potential to reduce Joseph’s Age Pension entitlements. Adviser Nicole also ran some long-term forecasts to check whether the couple’s desired level of spending is sustainable throughout retirement. We found with their current investment choices they are likely to be able to maintain a comfortable retirement and do some of the travel they had been too scared to spend money on. We found they could actually consider taking slightly less risk and still have what they need, which was important to them as they had found they are becoming more anxious about short term changes in their super balance as they get older.
Nicole noted,: “a lot of people seem to know a little bit about each piece of the puzzle but just don’t know how to put it together. That’s not surprising at all as the solution to the puzzle looks a little bit different for everyone.”
Finding your solution to the puzzle
Just as you can try to learn a method to solve a Rubik’s Cube with online tutorials, having a clear approach can help you solve your own particular retirement puzzle. While some people might enjoy trying to figure it all out on their own, others will prefer to get expert help and access the right tools to do the job.
The team at Retirement Essentials believes that the most important things we can do to help is to:
- Provide expert retirement advisers, who understand your issues,
- Help you untangle the rules
- Use our powerful technology to help get better outcomes.
The vital tool for solving your puzzle is a strong Retirement Income Forecast. This sophisticated digital modelling helps you to anchor your retirement plan around your specific objectives, showing you a range of possible outcomes which enables you to decide on your own best possible solutions.
With help you can unlock the solution that’s right for you — and everyone is different. Good advice can lead not only to better financial outcomes but give you the comfort of knowing you’re on a sustainable track.
After all, this isn’t just a game you’re trying to solve for fun—it’s your entire retirement journey.
Do you, too, find combining the different aspects of retirement income a puzzle?
Which part do you find the hardest? Tailored, adviser-led Retirement Advice Consultations offer an affordable way to map your retirement journey.
