How to Plan for the Retirement Lifestyle of Your Dreams

When you're in the middle of a busy career, retirement can seem like a far-off dream. It's closer than you think, however — and it's an important life milestone that requires long-term planning. 

Great financial planning is the key to the perfect retirement. It's a detailed, time-intensive effort, but it's well worth the effort. By starting the process now, you can build your savings and investments to ensure a steady income and a fun, exciting lifestyle. At Sydney financial planners, we can help you lay the groundwork.

When you've spent decades building a career, retirement is the opportunity to reap the rewards. Start planning with the fun part: imagining your ideal life. Anything is possible, from world travel to a full-blown second career.

To give you a few ideas of what you can do in retirement, here are some popular options:

Volunteer Work: Donate your time and expertise to schools, museums, charities, or international relief organizations.

Retirement Career: Start fresh with an exciting new business or part-time online venture.

Travel: Explore Australia or head out into the world.

Education: Go back to school to get a degree or take classes in subjects that interest you.

Leisure Hobbies: Spend your time doing things you love, such as gardening, reading, or sewing.

Estimating Retirement Income Needs

Now that you have an idea of your perfect retirement, it's time to figure out how much it will cost. For the average person in Australia, a basic retirement costs at least $27,913 a year for one person or $40,194 for a couple. These numbers cover your essential costs: housing, food, utilities, and simple health insurance. They do not include holidays, entertainment, new cars, or updated household goods.

Chances are, your ideal retirement doesn't include strict cost-cutting. In that case, your annual expenses will be closer to $44,183 for yourself or $62,435 for you and a partner. What's the difference? You'll have more freedom to buy premium health insurance, dine out, go shopping, and take holidays. Plus, you're more likely to have the spending power to buy a new car, TV, or mobile phone.

Making a Retirement Budget

The figures above are merely estimates; your actual expenses may be different. A projected budget can help you get an idea of how much money you'll need for the ideal retirement.

To start, it's a good idea to estimate your expenses in three areas:

- Monthly costs (essential)
- Annual/quarterly costs (essential)
- Monthly costs (optional)

Essential monthly costs cover things like rent, food, utilities, medications, and fuel. These are the necessities you need simply to get by. Annual and quarterly costs account for the bills that come up on a non-monthly basis, such as property taxes, car or home maintenance, and insurance.

The final category is the fun category: optional spending. It's the budget category that helps you live your best life in retirement. In this section, include things like payments for a new car, meals in restaurants, entertainment, clothing, holidays, and the latest computer or mobile phone. Make sure to add in the costs for the activities you want to do, such as golf, hobbies, or education. At Sydney financial planners, we offer a convenient budget planner to help you imagine all possible expenses.

Retirement Expenses vs. Retirement Income

Now that you know how much retirement will cost, it's time to figure out how to pay for it. Start by adding up all of your expected post-retirement income streams: savings, investment returns, superannuation income, and government benefits.

Compare your retirement income to your anticipated expenses. Is there a gap? Reach out to our team at Sydney financial planners — we can help you diversify and adjust your strategy to make up the difference. With a solid financial roadmap, you can save for retirement with confidence and peace of mind.

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