I’m at least 10 years away from retirement, but I admit there are times when I’ve pondered my future in the small hours, especially when work or family circumstances change.
Financial worries are surely universal and, leading up to or during retirement, anxiety about money can feel overwhelming. It’s in these quiet sleepless hours that the big life questions take centre stage.
The 3am worry #1
Can I afford to retire?
One of the most challenging shifts in retirement planning is moving from a savings mindset to a spending mindset. For years, you’ve been saving towards the future – so spending that hard-earned money could feel counterintuitive or even reckless. Retirement isn’t just about leaving work; it’s about embracing a new stage of life where your resources need to sustain you for decades.
If you’re a couple, retirement isn’t an individual decision – it’s a shared transition. Financial decisions in retirement can influence your lifestyle, your relationship and even how you manage conflict. Money is often an emotional topic as well. Our biases, values, and habits formed over a lifetime don’t just disappear when you stop working.
According to the Australian Bureau of Statistics (ABS) report ‘Retirement and Retirement Intentions, Australia’, the top reason people near retirement leave their job is becoming eligible to access their superannuation. For people intending to retire, the main factor that will influence their decision about when to retire is financial security.
Bob and Denise
Bob, 67 and Denise, 62, are a hardworking couple who’ve always been in sync – until now. While Denise is thriving in her part time role, earning $25,000 a year and loving the routine it brings, Bob is ready to wind down. After years of full-time work, and currently earning $80,000 a year, he’s dreaming of slowing his pace, taking more holidays and enjoying life.
The challenge? Balancing their differing retirement goals while securing a stable financial future.
Starting the conversation
Bob and Denise have been diligent savers. Bob has $400,000 in superannuation and while Denise has just $26,000, they have $50,000 put aside in cash. However, with Bob’s current income, they’re not eligible for any Age Pension support.
Transitioning and adjusting: Rewiring Retirement
After careful consideration, Bob decides to cut his work hours in half, reducing his income to $40,000 annually. This compromise gives him more time to relax, travel and ease into retirement without fully stepping away from work.
This adjustment also opens up new financial opportunities. With his reduced income, Bob becomes eligible for $8,000 per year in Age Pension support.
Smart super moves
Using the Retirement Essentials Retirement Forecaster, we explored safe spending levels for Bob and Denise, factoring in their adjusted income and transitioning Bob’s super into an Account-Based Pension (ABP). This provided a clear picture of how they could maintain an annual retirement income of $60,000 without depleting their savings over time.
Bob’s plans for three significant overseas trips were also added into the forecasts to ensure their long term financial security wouldn’t be compromised. With this bigger picture outlook, Bob and Denise could confidently align their spending with their retirement lifestyle goals, knowing they are making an informed decision.
The first step was Bob taking stock and starting the discussion about what his and Denise’s retirement goals are, and what they have in mind for their future.
The 3am worry #2:
Can I afford to go on that holiday?
One of the keys to retirement planning is achieving a balance between dreams and financial realities.
Travel is often on the top of peoples lists when they think about the freedom that retiring can bring, and the places they have always wanted to experience but haven’t had the opportunity.
Yet this can come with a big price tag, especially for overseas trips. Clarifying the impact of your larger planned expenses on your long term wealth, provides greater confidence that your funds will last in the long run.
The 3am worry #3:
Can I afford to visit family?
The holiday season is a natural time for travel and family gatherings, particularly in Australia’s summer. The costs associated with travel, gifts and celebrations can add financial stress, especially when planning on a fixed income.f
To reduce this stress, it’s helpful to plan ahead. Knowing your safe spending level can be a guide for budgeting for the holidays, ensuring you enjoy the festivities without financial worry. One of the most powerful tools that Retirement Essentials advisers use is the Retirement Forcaster. This tool assists in projecting how much you can safely afford to spend, providing a clearer picture of your finances throughout the year.
Why these worries run deep
Money isn’t just a practical concern; it’s tied to our sense of security, freedom and identity. Financial concerns can feel overwhelming, especially when they’re keeping you awake at night.
For couples, differing priorities or a lack of communication about finances can amplify stress. Navigating retirement together means finding common ground on what matters most and working as a team.
A lack of knowledge about options, or a fear of making mistakes and missing something can keep people stuck, avoiding decisions altogether.
Turning worry into action
Sleepless nights don’t have to be a permanent feature of your retirement journey. While financial stress can feel paralysing, taking proactive steps can transform anxiety into empowerment. Here’s how
- Start with a review. Take stock of your financial situation. If you’re a couple, have an honest conversation with your partner about your goals and concerns.
- Use tools to gain clarity. Retirement Essentials offers calculators and tools that help you assess safe spending levels, and your eligibility for any Age Pension entitlements.
- Seek expert advice. A consultation with a financial expert can help you explore strategies tailored to your particular circumstances, whether that’s optimising super, understanding gifting rules, or planning for future spending needs.
Your Financial Freedom Checklist
- Establish retirement goals: What lifestyle do you want, and how much will it cost?
- Understand your financial position: Knowing your savings, super and income sources.
- Maximise your entitlements: Use tools and advice to ensure you’re receiving every benefit for which you are eligible.
- Plan for long-term needs: Consider healthcare, home modifications and potential aged care.
- Communicate openly: If you’re in a relationship, work together on goals and priorities.
- Focus on your values: Build a financial plan that reflects what matters most to you, whether that’s family, travel or security.
A path to peace of mind
Through a thoughtful approach to planning, you can shift financial worries into manageable steps. While no one can predict every twist and turn, the right strategies can help you make informed decisions, maximise your resources and feel more assured about your financial future. It’s not about dreaming but managing – giving you the clarity and control to navigate retirement with confidence.
Don’t let late-night worries linger – turn them into an actionable plan. Book a consultation with one of our experienced advisers today, and gain peace of mind about your retirement finances.
Do you, too, wake at 3am with money concerns?
What are your strategies to try to keep them under control?
