Your Next Chapter

Hello and welcome. Thank you for joining us for this presentation, which is going to focus on the next chapter of your retirement journey. My name is Jason Cook, I'm a financial planner and have worked for the fund since 2011, having been in the financial planning industry since 2011. Through that time I've been fortunate to work with many hundreds of retirees and been able to get great insights into some of the things that have led to a successful retirement and I look forward to sharing some of those with you in today's presentation.

Just a general disclaimer that any of the topics and strategies discussed in today's presentation are of a general nature only, and if you are looking to potentially implement them we recommend that you get personal advice before for doing so.

Planning for retirement really involves three high level journeys, the first of which we'll be focusing on today is really thinking about your next chapter. Things to be considering in the leadup to retirement include how much you're going to need for the lifestyle that you're looking for.

The second stage is really about the transition period. Unlocking strategies such as transition to retirement using things such as a transition to retirement pension, reducing work hours and potentially using some of your unused leave.

The third part is really planning the next chapter and that's where the rubber hits the road and you implement strategies for your retirement such as account based pension income streams and access to potential age pension entitlements.

A high-level agenda of what we're going to cover today. First of a little about Equip Super and who we are, the key stages of the retirement planning journey, and some of the things that you need to consider when planning for retirement strategies, and some other non-financial considerations such as the four pillars for retirement and tools and resources to help you with that. Then we'll show you some next steps of how you can get some advice.

Equip Super is an industry fund so that basically means that our profits go back to the funds members, not to external stakeholders. We've got a history of strong investment performance and very competitive market fees. In addition to providing long-term service to our members we've also been recognized by our industry peers, this includes awards from various independent rating services such as Super Ratings, Chant West and Money Magazine.

Whilst your retirement years can be some of the most enjoyable of your life, planning for them can certainly be some of the most confronting, and it certainly goes beyond planning just your money, and we'll look at some of those things in deeper detail.

Some retirement statistics recently have shown that Australians who generally plan to reduce work commitments and transition to retirement between the ages of 62 to 64 typically end up bringing this forward, ultimately doing it between the age of 61 and 63. Now what this tells us is that people are doing it before they're sometimes ready and it's actually brought on by unforeseen circumstances, such as health issues, caring for someone with health issues, or potentially a redundancy. So the point that I'd like to make here that it's always important to be prepared, to plan, to have an idea about potentially how you're going to spend your time in retirement. And just as importantly how your finances are structured.

And the reason is if you one of these contingencies do happen - and I have actually seen this personally in my own planning career over the last 12 months - if you're not prepared it can make what is already a very stressful situation even more so.  So the advice that I would give here is just to be ready, just to be ready in the event that these things do get brought forward, which the statistics are telling us does happen.

A question that I'd get asked on a weekly basis is how much am I going to need to retire? Now there's really two high level parts to that question. The first is around your financial situation. Your financial capital. Which is going to be based on your superannuation balance and investment returns.

The second part is life expectancy, and this is clearly something that the majority of us are not going to know with any confidence. So with reference to the table on the screen there we can look at various potential life expectancies for people at different life stages. For example, someone who's aged 60 right now, potentially based on statistics, have a life expectancy of 25 to 27 years and based on that. We will factor in those calculations when working out an appropriate amount of capital that you will need to retire with.

An expression that I hear almost on a daily basis is retirement age, and the question at what age can I retire? The simple answer to that is there is actually no such thing. There is no such thing as a retirement age. You can retire at almost any stage of your life. There are two key ages though that most Australians will need to be mindful of in planning their retirement journey.

The first one is the age that you can access your superannuation benefits, the second one is what age that you can access government funded Age Pension Centrelink benefits, and we'll have a look at a bit more detail around those.

Now the age that you can access your superannuation and Age Pension is dependent on your date of birth. With reference to the slides on the screen, depending on your date of birth, you can access your superannuation between the ages of 55 to 60 and the Age Pension between the ages of 65 to 67.

When you're in a position to access your superannuation, at a high level you’ve got three broad options. You can actually leave your money in super - the Howard government got rid of compulsory caching rules, so you can actually in fact leave your superannuation in its current form indefinitely. The second option is to convert it to an income stream. Typically, for most retirees this would be an account-based pension income stream or an annuity income stream. Thirdly you can actually take it (your super) out as a lump sum cash withdrawal.

Typically, what I see is actually a combination of the last two, whereby people will have an ongoing income stream to meet their daily ongoing living expenses with ad-hoc lump sum withdrawals to fund capital expenditures such as a car purchase, overseas holiday or home renovation.

At a high level there are four stages of the retirement planning journey. The first one, pre-retirement, where you're getting an understanding of your retirement date and the amount of money that you're going to need for the retirement lifestyle. The focus here is really about growing your superannuation and financial capital.

The second stage is really one to two years out, which is what we call the transition or the pre-retirement age. People here are looking at one to two years out, they're actually potentially reducing their current work hours and transitioning into retirement by reducing their current working hours through annual leave, or a transition to retirement pension.

The third stage is the early retirement years, what we call the active retirement years. This is whereby you are fully retired from the workforce and are accessing superannuation benefits through a retirement income stream and potentially some Centrelink.

This is a very important part of the retirement journey because these are the active retirement years whereby you've got potentially, hopefully, full health and the ability to enjoy an active Lifestyle.

The fourth and final part of the journey is what we call the passive retirement years. This is where lifestyles become more sedentary and you're actually a lot less active. Factors here to think about include potentially living in new living arrangements and potentially downsizing and moving into Age Care facilities.

At this age typically health issues become more of a concern. For retirees the two big questions that will come up when retirement planning is discussed is when can I retire and how much money do I need to retire? We've just looked previously at the age that you can retire, and as we talked about accessing superannuation Age Pension benefits, we'll now talk a little bit about how much money that you need to retire. This will primarily be driven by income. The income that you're going to require on an annual basis to meet the lifestyle that you want.

Now the lifestyle that you want is going to be very unique to you. I always encourage people to do their own budget, look at their own previous spending habits, because typically someone's lifestyle and retirement is not going to differ significantly from their pre-retirement years. So make sure that you have your own understanding of your own unique spending habits and then on top of that factor in some other things that you may want to do in your retirement years such as overseas travel, potentially buying a caravan to do more domestic travel. Other things include car replacements, home renovation.

Once you factor those capital expenditures on top of your ongoing retirement income needs that will then allow us to move a little bit closer to getting an idea of a lump sum amount of money that you will need in your superannuation to provide you with that lifestyle.

When working with clients before they prepare for retirement there's a number of questions I'll often ask. One of them is are you ready to stop working? A situation that I'll often see is that someone who feels like they are ready to leave their day-to-day job, but when they do so realize they were missing out on a lot of things that were actually giving them a lot of satisfaction, such as social connection, daily structure and a sense of purpose.

One of the questions I ask is will you miss working? Another important question is even though someone may want to leave their job immediately for whatever reason, we need to ask a very important question. Is your super adequate for retirement?

A situation we don't want to see is where somebody rushes into retirement but then finds out that whilst they are happy to be leaving their employment that they are not financially adequately set up for a satisfactory retirement experience.

In helping people with a retirement journey, a situation that I see is people getting overly concerned about having exact details about how much money they're going to need. My advice there was you don't have to have every single dollar down. A general idea about how you're currently spending your money and your current living arrangements is usually a good starting point.

The best reference point for this would usually be to do a budget. If you don't do a budget I would suggest potentially tracking your spending for a few months to give you an idea about your current lifestyle living expenditures. Another important part of the journey is to get a very clear understanding of your current assets and liabilities.

Most people want to retire debt-free. Having an understanding of what that looks like and current assets outside of your superannuation is another consideration.

Future living arrangements. Are you going to potentially downsize? A situation we see a lot as people get into in their later years and children have moved out of home. That is something to also consider on the journey. As it will have a financial impact as well as a lifestyle one.

Through the years I've been fortunate to work with many hundreds of retirees on their journey. For those who are having the most rewarding experience, one thing I tend to see is the fulfillment of four key pillars.

The first one is financial well-being and security. The financial security to allow them to fund the right retirement lifestyle that they're after.

Physical and mental health. The ability to have physical vitality and mental clarity to enjoy the retirement years.

Thirdly, connection, a sense of connection with family friends and people in their community.

And fourth. A very clear sense of purpose. Something that sometimes people will sometimes struggle with when they've left the workforce. But everyone I know who is having a very rewarding retirement experience has a very clear sense of purpose. That's going to look very different for everyone.

Whilst we've covered a lot in today's presentation one thing I'd encourage you to do if you want to learn more about things that we've talked about is to explore the interactive hub on the website. This will allow you to explore various modules including things such as super contributions, retirement investing and much more.

One of our most powerful interactive tools on our website is our calculators. Giving you the ability to look at things such as what income will you need when you retire, working out a plan to give your super the maximum boost, and how does your retirement balance translate into an income. I'd encourage you to get on the website to look at these. to play around and have a

If you'd like to further explore any of the strategies and concepts discussed in today's presentation I would encourage you to reach out and make an appointment with a member of the financial planning team who will assess your goals and objectives and own personal circumstances and provide recommendations on strategies to help you meet your own personal goals. The team is a salaried team and do not work on bonuses or commissions and any advice given is in your best interest.

If you wish to make an appointment which can be done via video conferencing face to face or phone please click on the link on the screen.

We've covered awful lot today and hopefully it's given you some insights into the first steps in your retirement journey.