Many Australians who had planned to retire in the coming months are rethinking their options, as COVID-19 has changed the landscape for retirees. For some, it is a financial decision due to the impact on their superannuation or because they can’t exit their business due to the current market situation. For others, it is more about the emotional transition and whether this is the right time to make the most of their retirement.
Here are some things to consider if you are thinking about whether you can still retire in 2020.
How well is your super structured?
For Apt clients, the impact of COVID-19 on superannuation was minimal, as we work with our clients to structure superannuation to weather financial storms. If you haven’t put a structure in place, it’s not too late to get advice – it might mean working for a little longer, but financial downturns aren’t once-in-a-lifetime events so it’s worth putting some plans in place. It’s best to get your super in the best possible shape now, because between bushfires, floods and COVID-19, if 2020 has taught us anything, it’s that we don’t know what is around the corner.
If you aren’t sure whether you really do have enough to retire, our free guide, How much do I need to retire?, is a great place to start.
Are you running your own business?
For business owners, it may be a little more complicated. Many business owners don’t pay regular super and had an exit strategy in place to sell the business on retirement, which might be more difficult in the current climate. If you are in this situation, it’s a good time to put some plans in place to make sure that you can sell your business at maximum value when the market recovers.
Getting expert advice, from both business and financial advisers now will help you revise and strengthen your plans. It might not enable you to meet your original retirement date but resetting the date and taking action toward making it happen can help you with the emotional impact and may even see you in a stronger position when the time comes.
Have you prepared for the emotional transition?
Helping so many Australians with their retirement, we see the importance of planning for the emotional transition every day. And, in my mind, it’s almost, if not as, important as the financial one.
You can read our tips on the emotional transition here, but essentially, it’s about planning how you will spend your time, as you will find yourself with more time on your hands than ever before. It might sound wonderful, and to most it does, but the reality is that the time can be hard to fill and, without planning for it, it can quickly become a negative.
In the current climate, particularly for those living in Victoria, restrictions on travel, social activities and contact with others can make this transition even more difficult. Many retirees plan to spend more time with family, see the world or pick up new hobbies, much of which simply isn’t possible right now. It might be worth considering whether you continue to work until the situation improves, bringing in an income and topping up your super. This way, you will have a little more money in your pocket and can start living the retirement you want when restrictions lift.
Have you considered a transition to retirement strategy?
If you can’t or don’t want to retire in the current climate, it can be disappointing, particularly if you had already set a date. One way you can start the process without cutting off your income entirely, is by looking at a transition to retirement strategy (TTR). A TTR allows you to continue working, reducing your hours, while starting to draw on some of your super.
This way, you can take a proactive step toward retirement while still keeping an income coming in to cover your living expenses, topping up your super, and potentially reducing your tax liability.
Are you receiving advice?
If you aren’t receiving financial advice, it’s a good time to start a discussion. The right financial adviser can help you decide on your next steps, ensuring you can live for today and plan for tomorrow.
If you are thinking about retiring but are unsure of your next step, get in touch to find out how Apt Wealth can help you ensure you are in the best possible position to live the retirement you deserve.
General Advice warning
The information provided in this blog does not constitute ﬁnancial product advice. The information is of a general nature only and does not take into account your individual objectives, ﬁnancial situation or needs. It should not be used, relied upon, or treated as a substitute for speciﬁc professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.