Planning for the Future
Your retirement is a journey that evolves over time, typically divided into three distinct stages: the early period (ages 60 to 70), middle retirement (ages 70 to 80), and late retirement (80 and beyond). Each stage comes with its own set of challenges and opportunities, influenced by factors such as your retirement age, health status, financial resources, and life expectancy. Understanding and preparing for these phases is crucial, especially the often-overlooked third phase, where the focus shifts dramatically.
Early Retirement: Enjoying Your Newfound Freedom
In the early phase of retirement, you’re likely to be more active, engaging in travel, hobbies, entertainment, and social activities. This is the time when you take advantage of the best of your health. For most, it is during this phase, that you are likely to have the energy and desire for new experiences.
However, bear in mind that the longevity of this phase is contingent upon the factors mentioned above. Sustained health and initial wealth playing pivotal roles in determining how long you can maintain this lifestyle.
Middle Retirement: Adjusting to Changing Realities
Moving into the middle retirement phase, you might start to experience reduced interest in some of these activities. Health issues may begin to surface, and the need for more careful financial management becomes apparent.
Late Retirement: Prioritising Safety and Care
Retirement’s third phase, the late phase, brings significant changes. Here, the financial focus shifts from personal enjoyment to ensuring safe housing and accessible healthcare. Planning for this phase can be complex and challenging, requiring careful consideration of several factors, including:
- Health Care: In 2022, the Australian Institute of Health and Welfare projected that per capita healthcare costs could rise from $7,926 in 2020, to $9,534 by 2035. These averages are based on total population statistics. This suggests that individuals in retirements’ third phase may face even higher costs. Planning to be able to meet these costs is critical.
- Quality of Care: During the early and middle phases, retirees often plan for a certain standard of living. However, as they prepare for the late phase, they need to fully consider the quality of care they will require. This includes services like home delivery of groceries, meal preparation, home maintenance, gardening, and disability services. Ensuring that these needs are met is important to maintaining a comfortable quality of life.
- Aged Care: Many Australians prefer to live independently in their homes for as long as possible. Where financially eligible, this may be supported by government-funded in-home aged care services. However, the need for residential aged care often arises, particularly after the loss of a partner or when independent living becomes unsustainable. Residential aged care will incur costs, including basic daily care fees, means-tested care fees, and accommodation costs.
Longevity Risk: Preparing for the Unknown
One of the greatest uncertainties in retirement planning is longevity risk—how long each phase of retirement will last. We know that uncertainty is a key factor in considering financial risk. Guidance based on published studies, family health history, and medical advice can help mitigate the financial consequences of this risk. Planning for longevity involves making informed decisions about superannuation, retirement planning, wealth management, and aged care planning.
Retirement Planning Strategies: Preparing for Every Phase
To ensure a secure and comfortable retirement, it’s essential to develop comprehensive strategies that address all phases of your retirement. These strategies should include:
- Superannuation Strategies: Ensuring that your superannuation funds accumulate progressively to cover your needs throughout all phases of your retirement.
- Retirement Planning: Developing a detailed plan that considers your lifestyle goals, health care needs, and financial resources.
- Wealth Management Planning: Effectively managing your assets to provide a stable income throughout retirement.
- Aged Care Planning: Preparing for the possibility of requiring aged care services, whether in-home or in a residential aged care facility.
Getting Supportive Help
Navigating the complexities of retirement planning and ensuring you appropriately consider all the phases of retirement can be daunting, but you don’t have to do it alone. The experienced advisers at Continuum Financial Planners are qualified to help you develop a comprehensive plan tailored to your unique needs and goals for all phases of your retirement including the third phase. To arrange a meeting with one of our advisers, please contact our office:
- By phone at 07-34213456, or
- use our convenient Book A Meeting facility to schedule an appointment.
(This article was posted in August 2024. It may occasionally be refreshed/ updated.)
