The Next Stage

Retirement planning in 10 steps.

- Damien Martin

Over the past few decades, Australia has built up its retirement planning system to be one of the best in the world. It ranked fourth in the 2018 Melbourne Mercer Global Pension Index, behind the Netherlands, Denmark, and Finland, with Sweden rounding out the top five. The key, says Dr David Knox, author of the study and Mercer Australia senior partner, is ensuring the next wave of pensioners can live comfortably but leaving enough for subsequent generations. “It’s a challenge that policymakers are grappling with,” Knox said. “For example, a system providing very generous benefits in the short-term is unlikely to be sustainable, whereas a system that is sustainable over many years could be providing very modest benefits. The question is — what’s an appropriate trade-off?” The biggest change came in 1983 when the federal government and labour unions collaborated to create the Super — superannuation funds — Knox told Forbes. Before then, he said, fewer than half of Australians had adequate pension plan coverage. Whether you’re a couple years or a couple decades away, everyone should have a retirement plan. Here are some things you’ll need to consider:

1 What is your idea of retirement?

Not everyone is cut from the same cloth. For some, a retirement plan might need to include all the vacations they never took because they were working too hard. Others might want to step back from working full-time but not give up the sense of purpose that comes from having a job to do. Some might want to relax, live a simpler life, and let their savings carry them through. In order to be happy in retirement you’ll need to do some self-examination and decide what you really want out of your golden years. Which leads us to the next step.

2 Create a Budget