Retirement – Making the Most of the Last Lap
Retirement is generally regarded as quitting full time work somewhere in our 60’s, and starting a new phase of life without having to trudge off to a daily shift at the salt mine.
Although retirement can last 20 or 30 years, it is the last lap because there is only one outcome at the end of it. We don’t get any younger; the body starts to fail and at some point we die.
So broadly speaking, retirement has two (2) phases which are often blurred and overlap.
- The early part is enjoying a new-found freedom and having fun.
- The later part is the drawing near to life’s end
The early fun part often requires part time work and some budgeting so that money doesn’t run out. The later end of life part always needs some serious planning to make sure that (a) any time spent in failing health or aged care runs as smoothly as possible; and (b) we don’t leave a mess behind after death for our kids to clean up.
In my case, I am 66 and for me retirement is pretty good at the moment. I survived a serious heart problem last year and now I run my business part time from home. I am healthy and relaxed. I spend time with family and friends; and I work at my own pace. That would be at enjoyable pace rather than high speed, high stress pace of the past. I see fewer clients than I used do and they have to be a little more patient sometimes because they find me away on a holiday occasionally, whereas two years ago that would never happen. Work is now fun and it keeps my brain active. I feel I could do this for at least another decade; and I will if I can because I love what I do. I am very good at it and I know I can make life so much easier for others.
So here I am at the start of my retirement, and I am very mindful of the deterioration of health and end of life that is somewhere ahead. So here is my top ten (10) checklist to make sure that my own affairs are in order:
- Get debt free, my number one priority as it is a lot less expensive to live debt free in retirement.
- Boost super as much as is affordable. The government constantly screws with it but it is still the best tax concession saving we have.
- Live as tax free as possible. Superannuation pensions and the Age pension (Centrelink) help this cause, while income producing assets outside super (e.g. shares and rental properties) tend to work against this cause but if you are happy to pay tax then it’s fine. Every situation is different so it is a matter of structuring for the best result.
- Review personal insurances. Is all of it still needed? Typically, it gets hellishly expensive as we get older.
- Check insurances in your super fund. You are paying for it even if you think you aren’t, and they are also age-based premiums.
- Review your Self Managed Super Fund. Is it still appropriate in old age? Do you have a plan for it? So many SMSFs perform poorly and there is no mercy from the ATO for ageing trustees. Additionally, there are some real benefits for older people to transfer back to retail super (depends on your situation though).
- What to do with your business? Business owners need to make decisions about what to do with theirbusiness and the company or trust that owns it. Will it be a family succession or will it be an external sale? While succession continues your legacy and helps the family, proceeds from a sale can attract a big capital gains tax concession if you transfer it to super.
- Plan for mental health deterioration. We all need to have someone we trust beside us to make decisions and sign on our behalf (i.e. Enduring Powers of Attorney and Medical Directives).
- Plan for aged care. Nobody wants to go there but in the event that it becomes necessary, have a plan and tell the kids well in advance so that the decisions are yours, not theirs.
- Organise your Estate. This is an area that two thirds of Australian adults ignore which is silly because your family then has to deal with the Public Trustee, which can be an excruciatingly long, frustrating and expensive process. For most of us estate planning is so much more than a will because a will only covers assets in your own name (only). Separate arrangements must be made for super, companies and trusts. The idea is to make your instructions clear through your will, your super nominations and other post death instruction documents. Also be aware that you can put extra protections in place for a disabled beneficiary; and extra protections in place for yourself against a problem beneficiary (e.g. a child with a marital, gambling, drug or spendthrift problem).
So there it is. My message to you is get this stuff done, find a purpose in life, and have an enjoyable retirement with a lot less to worry about. Call me anytime to discuss because nothing I have outlined here is straight forward.