Why is retirement so hard?

The reality is, there's more tricky choices in this stage of life than we face in any other time of our lives.

The Epic Retirement Flagship Course is back!

After a really successful Autumn program, we’ve released our next dates for the How to Have an Epic Retirement Flagship Course. There’s two six week course events scheduled for coming months. And, I’m offering a 25% early bird discount for a limited time, because I want everyone to come!

WINTER EDITION - 6th June - 17th July 2024

SPRING EDITION - 8th August - 18th September 2024

I made a little video to get you excited.

What’s included in each program? Hop on over to our website to have a look.

And finally, a quick heads up for a couple of events I’m doing in May in Melbourne which are now booking up!

I’m headed to the Australian Shareholders Association (ASA) Conference in Melbourne on the 21st May where I’ll be joining a panel for an active discussion about retirement. They’ve got a great deal for the conference + new membership for those who want to attend… check it out!

And on the same trip I’m speaking at the Boorondarra library in Melbourne on the 20th May about ‘How to Have an Epic Retirement’… check it out!

So if you’re in Melbourne, come along to one of these events - and make sure you register early to get a place.

Have a lovely Sunday! Make it epic!

Many thanks! Bec Wilson

Author, podcast host, columnist, retirement educator, and guest speaker

This article was first published in The Age, The Sydney Morning Herald, Brisbane Times and WA Today.

Retirement is really hard to navigate. But what is it exactly that makes it so difficult?

For most of our working lives, once we make life decisions, the following impacts to our superannuation and our income are automatic or even quite passive. We get a job, our employer pays us a salary that we spend on living costs and takes 11 per cent super out. We never really miss it.

It goes into a super fund which we can choose, or they’ll choose one for us, and we actively, or passively invest that superannuation to drive compound growth for our future retirement. If we don’t specify our investment preferences, our fund is obligated to invest that into a default fund which, quite frankly, has offered strong returns over the long term.

The accumulation system of superannuation has generally served all of us well. The retirement phase of superannuation presents an entirely different situation.

It’s hard to understand because none of the decisions are made for us by the system. Suddenly, each of our big life decisions demands us to pay attention and take actions ourselves. And, what makes it harder is that there’s no easy way to predict what the later-life impacts of our decisions will be without trying to use a crystal ball. So let’s look at the decisions that feel difficult.

When and how to step away from work. The decision to stop work usually drives a waterfall of other choices around superannuation. Think of this as a two-part process.

For many retirees, this is the first time they’ve managed multiple layers of passive income from a couple of different sources.

The first part is considering when to step back from full-time work, into a more part-time capacity. The second is contemplating when to give up work altogether. Each choice rolls you into a series of other choices as a result.

Whether to use a transition to retirement account in pre-retirement. Once you decide you want to slow down your work a little, you might then contemplate where to draw some top-up income from.

You might look at whether it’s smart to use a transition to retirement account (TTR) to draw from your superannuation while you continue to work while you also contribute into your accumulation account. It can be a tax-effective move for some.

When (or if) to move into the retirement phase. One of the most difficult choices is when to move your funds into the retirement phase account and start an account-based pension.

A retirement phase account is available to you after you meet the conditions of release, reaching preservation age which is now 60, and giving up work. Or you can keep working and access your super after the age of 65.

It requires you to reapply to your superannuation fund for a whole new account structure, quite a lengthy process. But on the other side, you then transfer up to the transfer balance cap of $1.9 million per person, from the accumulation phase where you pay 15 per cent tax on earnings into the retirement phase where earnings up to $3 million are tax-free.

You will be forced to draw down a percentage of your funds each year, which is 4 per cent from 60-64, and 5 per cent from 65-74 and rises with your age. If you keep it in accumulation phase, you pay more tax, but you can draw down any time and are not forced to draw down a minimum amount each year. It’s your choice.

How your superannuation is invested in retirement phase. Once you flip over into the retirement phase you need to contemplate how your retirement phase funds are invested because there is no such thing as a ‘default fund’ in retirement phase.

And there’s no way to benchmark how your funds are performing other than to get in there and look around for yourself at how the one and ten year returns and fees stack up.

How much you need – or want – to spend each year in retirement. As you approach retirement or a few years before, you’ll find yourself wondering at how much you need to live on if you were to never work again.

You’ll probably ask yourself how much of your current cost of living is essential, and how much is for things you choose to do that you might change in the next phase of life?

To answer these questions, you’ll need to build a retirement budget and a bucket list budget and test different scenarios. See what impact changes to the budget will have on your longer-term finances.

Where the layers of your income will come from in retirement. For many retirees, this is the first time they’ve managed multiple layers of passive income from a couple of different sources.

Many in retirement today will layer account-based pensions and annuities, an age pension if you’re eligible anywhere from the age of 67, and income from any rental properties or investments outside superannuation. And, many retirees still work in a part-time, casual or contract capacity adding another layer.

In addition, it’s worth pointing out that some choose to simply stay in accumulation phase and pay more tax, drawing down lump sums to fund their living expenses. So many choices!

This article continues, read the whole article on The Age, The Sydney Morning Herald, Brisbane Times and WA Today. It is not behind a paywall, but you may have to sign in.

The life lessons from Australia’s most trusted GP: Dr.Kerryn Phelps AM

This week I chat with Dr Kerryn Phelps AM, one of Australia's most well-known GP's and health communicators. She's spent her life educating people about health, but she's so much more than a doctor. 

Today we’re talking about how we can maintain and optimise our wellbeing in our midlife and retirement. Dr Phelps just released her new book, The Power of Balance this month. And it leads us into a really interesting conversation about how health and health advice has changed, and what’s really important today, as well as a more personal conversation about her own career in health and what she’s learned along the way.