Sustainability: it’s a buzzword that won’t stop buzzing. Even in financial services, the concept exists, whenever there’s talk about maintaining an income, bank balance or savings account. It’s also a key component of one of the biggest goals in life — retirement.

“Many retirees and pre-retirees worry about having enough retirement income to maintain their desired lifestyle, fearing they may outlive their savings,” says Hostplus senior financial planner Bahar McLeod. “This often leads to a reluctance to spend their savings and anxiety around future financial security.”

Shane Hancock, general manager, Retirement at AustralianSuper, agrees that sustaining the same standard of living after the job income stops is a huge concern for this demographic, but it needn’t be. “With the right planning and advice, people are more likely to be able to live the way they desire in retirement,” he says.

Start as early as you can

The simple answer about when to start planning for retirement is: the moment you start asking the question. “It’s never too early,” says Hancock. “Depending on your stage of life, there are different actions you can take to make a positive impact on retirement savings.”

You can use your earlier years to focus on growing your savings and assets, before then analysing how best to administer them. “Getting your investment choices right in your 20s, 30s and 40s can actually have a big impact due to the value of compounding,” says Joshua Lowen, insights manager at SuperRatings. “In your 50s and 60s, it turns to ‘What do I need to live off in retirement and how am I tracking?’”

Picture the future

The experts all agree that having a clear vision of your post-retirement life is important. Picture the sort of environment you’d like to maintain, or even build on. What sorts of activities or hobbies might you undertake? “We encourage members to set goals and plan not only their income in retirement but also their lifestyle. This may look very active in their younger years and shift focus in later years,” says Hancock.

For many, removing the factor of employment from their daily grind will put into perspective the things they want to carry over. “Some examples include working out what a normal day in retirement might look like, how their relationships might change now they are no longer working, can they maintain their current home or will they need to move, and how to maintain their social network,” explains Lowen.

Factor in everything from day-to-day to sporadic outlays, such as weekly grocery shopping, travel, that boat you’ve always been keen on. “Set up a retirement budget for both regular and larger one-off expenses,” he adds.

Look at all your options

It’s easy to focus purely on superannuation for your retirement blueprint, but Lowen says that there are actually “three pillars” that should be top of mind. “[These are] superannuation, personal savings and government aged pension,” he says. “Maximising each of these will best support retirement goals.”

Other factors and resources may also be considered, advises McLeod. “Diversifying income streams, such as investments, rental income, the government pension or part-time work, can help provide additional financial security.”

Another option is to pursue a transition to retirement (TTR) strategy that is available to Australians over 55 and can allow them access to their super before they cease working full-time. It also can offer the potential to keep adding to super beforehand via salary sacrificing while working full-time.

Don’t forget your health

When creating a budget for your retirement, one significant factor to include is medical or health-related costs. And while you obviously can’t predict what may occur in the future, considering any known or expected outlays in this area will make a big difference. “Healthcare can be a significant expense in retirement,” says McLeod. “And it’s often underestimated. Planning for out-of-pocket medical expenses or long-term care can help in achieving flexibility and security in retirement.”

Look at what tools are available

Take advantage of the plethora of tools and guidance that are available when it comes to planning your retirement needs, many of which are offered by super funds. “Members who engage with their fund earlier and regularly — whether it’s checking your balance, using an online calculator, watching webinars, making extra contributions or seeking financial advice — tend to have a better understanding of super, more confidence and better financial outcomes in retirement,” says Hancock.

Talk to experts

The personnel at super funds can also be a vital resource when you’re looking at the future and how to keep the things that are important to you continuing when you begin the work-free chapter. Knowledge is key. “Understanding your risk tolerance, investment horizon and preferred investment style is essential for achieving financial goals,” adds McLeod. “Retirement planning is unique, so seek advice in the way that meets your needs.”

Read more @afr