Retirement Living – 10 th edition

delivers high margins, combined with low overheads and efficient work teams.

Working with a Transition Planning Consultant, the first step for Glenn and Robyn was to develop a personal transition plan to decide what to do after full-time work.

This allowed them to take this to their financial advisor to work out how much would be needed to fund their retirement.

Then, their business transition plan covers issues such as the worth of the business, the value of goodwill, and the potential to increase the value of the business with new systems and processes.

Glenn and Robyn are exploring two main strategies, with the first being that their two electricians, Sam and Bridget, take over the business.

the retirement life your parents and grandparents were likely to have.

Transition Planning Australia, an organisation that provides advice and education on retirement planning, says your retirement plan for those 15 plus years should include all five keys to happiness:

◆ Financial security

◆ Physical health

◆ Mental health

◆ Social connectedness

◆ A sense of purpose in life

Peter McKnoulty, Founder of Transition Planning Australia says, “One of our exercises revolves around helping people work out what their identity is and what is important to them, and one of the things we suggest to people is what did they like doing when they were younger. It gives a bit of guidance on what you can try in the future.

“A lot of our identity is tied into that business or work. You really have to reinvent your life and find a new identity.”

Your new identity will centre on the things that are important to you in life. These important life factors can be categorised into ten lifestyle areas, giving you a sense of all the different areas to consider.

The ten lifestyle areas you should plan your retirement around are:

◆ Volunteer/philanthropic work

◆ Income–producing work

◆ Spirituality or faith

◆ Social connections

◆ Residence

◆ Activities with family

◆ Activities with a spouse or partner

◆ Recreational or creative pursuits

◆ Intellectual stimulation

◆ Physical health

Planning around the ten lifestyle areas can put you on a good path for your retirement journey.

Financial planning

The most well known factor in retirement planning is financial planning, and rightly so.

While this is attractive, Sam and Bridget have limited funds available, so Glenn and Robyn are working with their Transition Planning Consultant and a team of advisors to devise a solution that would see them realise a fair value for the business in a way that Sam and Bridget can afford.

They will most likely transfer shares in the business over time.

This complements an operational transition strategy for Glenn to train Sam and Bridget on key operational aspects of the business such as design and client liaison during the transition period.

The second strategy for Glenn and Robyn is creating a charitable trust using some of the proceeds from the business.

This would enable Glenn and Robyn to work with their children to help those less fortunate than themselves, which they consider to be an important cause to direct their retirement energy into.

The couple look forward to entering retirement, when they can realise the vision they have carefully planned out and see the results of their strategies.

Case study provided by Transition Planning Australia

If you can’t afford to do the activities that you want to fill your life with in retirement it will not be enjoyable and you may have to go back to work in order to pay for your lifestyle.

While considering your retirement plan there are several factors of your finances to look at to ensure you know how much money you have and how much money you will need in years to come.

1. Keep track of your super

It is important to know exactly where your superannuation is held, as many people end up with multiple super accounts across different companies.

You also need to know how that super is invested, that the investment method aligns with your values, and whether it is giving you the best return and risk balance.

2. Track your budget

Make sure you know where your money is going each day so that you can set appropriate savings targets and work towards having the right sized retirement nest egg.

Understanding your expenses now, while you are working, will also help you to factor in the expenses you will have once you stop working.

3. Estate planning

Estate plans should be set up much earlier than you think, because you have no way of knowing when you might lose the capacity to be able to sign off on your wishes.

Your Will, Advanced Care Directives and other important documents also must be up to date with your latest circumstances and beliefs, so that your finances are appropriately planned out and you don’t leave your family with debt.

4. Strategies for protecting against unexpected events

The COVID-19 pandemic has impacted the finances of retirees in unexpected ways, and left many people feeling financially uncertain as the economic situation changes.

As part of your retirement planning, speak to an expert financial advisor who can help you put strategies in place to protect your situation against unanticipated events – like a pandemic or recession.

A financial planner can also take away a lot of the stress of planning out the rest of your life and make the transition to retirement easier.

5. Making the transition

Not everyone goes from full time work into full time retirement and if you’re not ready to stop work altogether you can move more slowly into retirement.

Depending on your financial situation, you might be able to reduce your working hours gradually while still earning enough to pay your bills or to save that extra amount needed to buy a caravan.

On your days off you can then explore what activities and events you would like to take the place of your work, so you are better prepared to further reduce your working hours.

Another option is using a Transition

To Retirement (TTR) strategy, which allows you to access some of your super while you keep working, although this has some pros and cons.

It can be difficult to organise and really complicated, so you should talk to your super fund or a financial adviser before attempting to use the strategy.

The TTR can be used if you are between 55 and 60 years of age and are still working and is used to top up your income from your super if you are working reduced hours.

It can also help to boost your current super while saving on tax if you are still working full time.

Positives of the TTR include that you will still receive super contributions while you work which will replace any more you take out, you will pay less tax, and it also means you will begin to plan for your retirement. However, it does affect your retirement income because you are accessing your super earlier than usual, and it is a very complex system.

A TTR can also impact any Government benefits you, or your partner, are receiving and this can be a significant downside depending on your situation.