Planning for retirement: Part one By Zeb Ashton on 27/02/19 - Mins to read: 2 minutes With life expectancies across the globe increasing and adults remaining active for longer, having a strong retirement plan is important. At the very least, most of you would like to be in a position to retire comfortably should you choose to. Planning is required whether you choose to sell up, retire or need to get out of business due to health reasons. Although Australia’s superannuation scheme is ranked as one of the best in the world, longevity means a 65-year-old who lives the average lifespan will need to generate returns over a 20+ year time period. Furthermore, lifestyle factors are much different today than they were twenty or thirty years ago, and generally retirees have a number of pursuits they wish to undertake for themselves or their family. While starting a retirement plan earlier is certainly beneficial, they key years for planning are generally during the 10 to 15 years before retirement. Before this, in our experience, most professionals are focused on other things – for example, building businesses and careers, furthering their own or their children’s education and mortgages. While these are important, being in a position to start developing your investment capital should also be on the priority list. In this two-part series, we discuss – albeit briefly given the scope of the topic – the key elements of strong retirement plan. This article will focus on the initial process of a retirement plan. What is a retirement plan? Retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve those goals. A strong retirement plan includes the: Identification of appropriate wealth creation strategies. Utilisation of structures to complement your strategy. Selection of investment assets. Development of a succession plan. Understand your objectives The key element of a retirement plan is simple – what do you want to do? When is it that you want to retire? Or, when would you like to be in a position to retire? How do you want to retire? Would you like to retire fully, move into part-time retirement, or perhaps find a new path all together? How would you like to spend your time? Do you want to travel, look after grandkids, or pursue charitable interests? What constitutes a comfortable retirement for you? According to the ASFA study, currently 20 percent of retirees have reached and are living a comfortable standard of living. This standard of living is not lavish but allows for more recreational activities and higher quality household goods and services. Are you aiming for this, or are you suited to a modest or median lifestyle? Consider the amount of income you require to meet your objectives. It’s important not to simply assume that your income requirements will drop. While previous generations naturally assumed they had to live on the age pension – which currently is $23,823.80 for a single person or $35,916.40 for a couple – forward thinking can allow you to set up income streams that will allow you to live a more active lifestyle. Also consider your capital objectives relevant to your specific situation: do you want to buy a holiday house? Is it important to provide support to your children (let’s face it, houses aren’t cheap anymore)? Do you want to downgrade your home? Is inheritance likely? What else…? When undertaking your initial retirement plan, defining your goals is important. There isn’t a one size fits all approach. In part two of our retirement planning series we discuss investment strategies and investment planning.