3 things you need to address before retiring
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When planning for retirement, your superannuation balance is just one among several key things you need to consider, and this preparation doesn't stop once you stop work.
With more than 15 per cent of Australians 65 years-of-age or older, our government and media place increasing emphasis on the need to plan for retirement--but some of the most important messages are absent, says Emma Sakellaris, general manager of Australian Unity Trustees.
The focus tends to be on encouraging Australians to take control of their superannuation, "however the broader picture of life in retirement, and how to prepare for the transition to retirement, has not received as much attention," she says.
"The misleading clichés about life in retirement often used in advertising and other media do not encourage people to think more deeply about their retirement, and how their later years could unfold," Sakellaris says.
"Understandably, advertisers do not want to show an image of retirement with someone who is bed-ridden or who is experiencing cognitive decline, but these are just as likely outcomes."
To cover as many eventualities as possible, there are three broad areas your retirement planning should address.
1) Asset protection
You need to start asking yourself some difficult questions as you approach retirement, says Sakellaris. The increasing potential of a loss of capacity is perhaps the toughest of these questions, and the one most people avoid.
You should think about who will protect your assets, manage your affairs and act independently and in your best interests when you are no longer able to do so.
2) Working after retirement
Just because you're ceasing paid employment doesn't mean you stop work altogether.
"Many people also consider questions about giving back to their community and establishing a philanthropic legacy, during their lifetime and into perpetuity," says Sakellaris.
"These questions can become particularly pertinent in retirement when people are often seeking to actively contribute to the community and establish a purpose."
3) Estate planning
Deciding who will manage your estate according to your wishes after you pass away is another key thing most people want to address in their twilight years.
Estate planning is itself an extremely broad area of consideration, with many moving parts and various external experts you can engage to help--such as financial planners, accountants and lawyers.
There are number of recent legislative changes in this area you should be aware of, particularly if you have a super balance of more than $1.6 million, whether in retail super or a self-managed super fund.
"While the concepts of estate planning, asset protection and philanthropy may seem unnecessary or too complicated, the reality is that all Australians should consider these as part of their life planning, and not just in the lead-up to retirement," says Sakellaris.
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Glenn Freeman is Morningstar's senior editor.
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