There is no doubt that retirement, particularly early retirement, holds significant appeal in the minds of many people in the workforce. However, how often does reality not match expectations because the individual may not have researched or gathered enough information prior to embarking on this next important stage of life?

This article is designed to provide you with information in relation to some of the important aspects associated with retirement. It will also act as a prompt for you to think of other specific aspects unique to your own situation.

Financial

No attempt is made to provide detailed specific financial advice. As this is a specialised area we recommend you seek professional opinions relating to your individual situation.

Before you contemplate retiring you will need to work out what you are spending on a daily basis and formulate a detailed budget. Remember, as your situation changes and cost of living increases (example food, petrol and insurance premiums) it might be an idea to update your budget regularly.

From your budget you will need to determine what you will need to fund in your retirement lifestyle. You will also need to calculate the cost of maintaining your lifestyle over what could be a significant period of years due to our increasing life expectancy. Also keep in mind that the earlier you retire the more capital you will need particularly in the earlier years when you are more physically active.

Here are a few additional suggestions:

• Consider such possibilities as painting your house, replacing your motor vehicle(s), re-carpeting, new fence, new sporting equipment or any other 'major purchase' whilst you are still in employment with possibly a larger monthly disposable and consistent income.
• For those people over the age 55, who don't work full-time, consider looking at possible ways to save on the costs of insurance premiums (house,contents, car, health). Consider asking your current insurance provider or shopping around for product that suits you.

Bonuses/incentive payments/productivity payments

If you or your partner, receives any of the above forms of remuneration you may be in a position to earmark them for a major purchase prior to your retirement. Alternatively, you may wish to target such payments to salary sacrifice or open a special savings account which you will not be able to access and that will continue to rollover compound interest. If you do not rely on these payments for 11 months then pretend you never see it!!

Likewise if you receive interest from investments into different accounts then consolidate into one and then consider how best to maximum their effectiveness e.g. a special purchase or investment you can not access.

There may be some taxation benefits, which are available on full retirement however these should be discussed with your financial expert or advisor.

If you have a partner who has not been actively involved in financial affairs consider involving or informing them. "Statistics show in the U.S. that 73% of women die single" (Financial Passages).

Will

Update your will - it is important that you ensure that your Will is up to date and suitable for your current circumstances. The same applies to your Power of Attorney.

Lifestyle

For those of you with partners, it is important to consider the changes of being home together and plan to have your own hobbies as well as activities you can do together e.g. golf, travelling.

To work or not to work

Consider what the definition of early retirement means to you? Does it mean that you want to eliminate your participation from the workforce totally? You may also consider the following options:

• Phasing in your retirement, discussing with your employer the opportunity for to flexible or alternate work options. For example, part time work, job share, reduced hours or working from home.
• Before you consider any flexible or alternate work options, discuss with your employer and financial advisor how this work practice will affect your Superannuation, Life and Disability Insurance.
• For those considering adopting a flexible or alternate work practice, check out our article that may assist you in your negotiations with your manager or workplace.
• Retiring from your place of work but advising that you will be available for short-term periods of employment as required.
• Casual or contract work- Consider putting together a resume and registering with an employment agency or approach business direct.
• Working from home as an employee or in a small business.
• Turning a hobby into work.
• A change of career utilising some or all of your skills e.g. consulting or lecturing at tertiary institutions.

Becoming a Volunteer

Approximately four and a half million people each year offer their services as volunteers in Australia. The selection of organisations who rely on volunteers is enormous and their needs have to be matched with the volunteer's needs. However, it is a wonderful and worthwhile service that you in your retirement can:

• Help support the community and provide a service to society.
• Meet and develop new friendships.
• Use your skills in a new environment and share your knowledge.
• Spend varying amounts of time to suit your needs and this may change as your situation changes.
• Combine voluntary work with paid work e.g. 3 days as a volunteer and one paid day per week
  

Relocation

Often people embarking on this next stage of their lives face the prospect of leaving their family unit behind if they make the decision to sell their home and relocate. This has significant implications and some issues to remember are:

• Are there options to cater for times when you may become older or more dependent?
• If elderly parents become incapacitated will you be in a position to provide elder care or visit them regularly?
• How will you feel about moving away from Children/grandchildren/family and friends?
• What facilities exist in the area? For example, retirement villages, medical, specialist and hospital services.
• Is the area well equipped with public/private transport should driving eventually not be an option?
• Is there a wide selection of community /sporting organizations to enable you to meet and develop new friendships?
• Consider whether you may be wise to rent initially to ensure your decision is the best one you can make for your future life.
• 'Empty Nesters' - who sell and scale down need also to keep in mind factors such as - gardening, 'pottering around in a garage or work room', office space for computers, spare sofa bed and so on. 'Empty Nesters' who sell a large home and go straight to a unit need to consider their unique situation - it maybe that a smaller house or townhouse maybe more ideal.
• 'Think before you leap' in all aspects of your impending early retirement.

Useful web sites:

www.govolunteer.com.au

Federal Government which will provide links to State Offices

www.fpa.asn.au

Financial Planning Association of Australia Limited

www.yourretirement.com.au

"Your Life, Your Retirement is Australia's premier retirement planning and lifestyle journal"

www.ato.gov.au

Australian Taxation Office