Chapter 1
Retirement: a good news story

For most Australians, retirement is a good news story. Regardless of where you live or how much money you have, there are some great reasons to look forward to, and embrace the idea of, not working full time anymore.

Firstly, Australia is blessed with an excellent and mostly free medical system. Yes, there is the odd waiting line and it can get frustrating from time to time, but if something were to happen to you, you would be cared for and looked after. There are also wonderful support services available to provide care for you in the comfort of your home.

There have been incredible advances in modern medicine, including how we care for older people. Once, people would retire and so mark the steady decline in health to their inevitable demise. This is no longer the case. Now, if you do suffer a serious medical problem, you will invariably stop smoking, drink less, lose weight and start exercising more regularly as part of your recovery strategy. Before long, you will be feeling better than ever. So retirement, though sometimes punctuated by bouts of poor health, is more likely to consist of sustained periods of good health. Optimism and positive thinking is the name of the game these days.

Secondly, Australia has a great sense of community. No matter who you are, where you live or how much money you have, there are plenty of things you can get involved in. Perhaps you will decide to volunteer in your local op shop or hospital, or you may set up and finance your own charity or small business. Everything is possible, no matter what your age.

Australia is also blessed with a wonderful climate. As thousands of 'grey nomads' make testament to each year, it's very easy to travel the country, stay in beautiful spots for weeks on end and pay very little for the privilege. Even if you never move beyond your own suburb, the country abounds with beautiful gardens, wildlife reserves and national parks everyone can access. A sandwich and some bottled water and the day can be spent enjoying some of the best scenery and outdoor spaces in the world. It's all there on our doorstep.

Finally, Australia has the Age Pension - a significant safety net - which ensures most Australians can fully enjoy their last years. Sure, there are always exceptions and cases of hardship, yet for most Australians who have enjoyed a life of full employment and managed to pay off their own home, financially, the situation is pretty good.

An increasing number of Australians are finding they are reaching retirement age with money in superannuation - sometimes a considerable amount - and that's a great thing. Not only does this mean true independence in your later years, it also means there is less pressure on the federal government to support Australians in their old age. So when people do need government support, there is more money available to them. And that's how it should be.

While you may have some concerns about your financial position and retiring, you should take a deep breath and relax. I truly believe retirement in Australia is a good news story.

Take time to reflect

Whether you're in retirement already or planning to retire in 10 or more years, the most important thing you can do is take time to reflect on what sort of life you want to lead in your later years.

For most people, retirement makes up the best years of their lives. For the first time in decades, they are usually free of the restraints of children and debt. These are big things in themselves. It's a time when, simply put, you have time. Time to enjoy your favourite pastimes and hobbies, time to enjoy your loved ones and be there for them in a way that wasn't possible while you were working, and time to just explore yourself and the things you really want to be involved in. Whatever this may be, it's worth taking time to think about what you want to do. As they say, you only get one chance at life.

Even if you are in your sixties when you retire, it is still quite reasonable to expect to live for another 30 or possibly 40 years. That's just about equal to your entire adult life to this point! With so much time available, you might choose to do several different things in retirement. You might, for example, choose to travel widely or start a small business in the first decade of your retirement. You might then decide to settle down and live in a cosy beach hideaway for five to 10 years. Finally, you might decide to move to a more urban location and live in a small apartment where you're close to everything and don't need to drive any more. There are lots of things you can get involved in during your retirement years. In fact, what you end up doing is largely only limited by your imagination.

It is important, though, to take time out - literally - and think about what you want to do in retirement and where your priorities lie. Is it all about being close at hand to watch your grandchildren grow up or is it about watching the sunrise from an exotic location? Or is your dream to live a quiet life where you can finally give your garden all the tender loving care it needs? Think about it. Who knows what fabulous ideas you will come up with.

Of course, I can hear you saying, 'so much depends on what I can afford; it would be different if I had unlimited amounts of money'. This is the cause of most people's fears: worrying about just how much money they will need to live out retirement, how much money they will have to spend week to week and whether their money will last. It's my hope this book will help you work through these issues and develop strategies on how you can make your money last as long as you do.

Take stock of your life

Most people think by working out the value of their home, adding to this the money they have in superannuation and guessing how much they will spend each year, they will have a realistic assumption of where they stand financially. But too often, this leads to an over-simplified result.

For a lot of people, their home is their biggest asset. So start by getting your home valued as it is important to gain an understanding of exactly how much it is worth. Then, ask yourself how well staying in your family home will fit your lifestyle as you move into retirement. People often stay in a house for sentimental reasons, which can be a big mistake. You should be looking to the future and thinking about what you really want from life. Will the house help you meet those wants? It might be that it will for the first part of your retirement. However, later on, when your children are probably well established in their own homes, you might not need so much room. It doesn't make sense to stay in a big home worth several million dollars simply because you're trying to qualify for the Age Pension. Look holistically at the life you want to lead and make decisions accordingly. The most common reason people stay in their home is so they can leave it to their children. But why not embrace the exciting possibilities retirement brings without being locked into a house where the high cost of maintenance and the time taken to keep it up to scratch stop you from enjoying your life?

People often stay in a house for sentimental reasons, which can be a big mistake.

You may also have assets you haven't thought about. A holiday home or an investment property? A caravan or a boat? These can be sold to help support you in retirement. While you might not decide to sell them immediately, you may want to 10 or 15 years into retirement and this could make a big difference to your financial situation.

If you own a business, you will need to make some big decisions about it as well. You might have the situation well in hand, but if you don't, get some advice from an expert to help you maximise its value. This could mean taking steps to restructure it and boost its appeal to potential buyers. If that's the case, you can't start planning too early. Most self-employed people look upon their business as their retirement nest egg, which is a problem. Business owners trying to sell their business can become frustrated by not being able to find a ready buyer as soon as they retire and so, out of desperation to stop working, are forced to close the business down. Make sure you start planning early and do everything you can to find good advice to help you avoid this scenario. Don't make the mistake of getting overwhelmed by the task at hand and leaving it too late.

Time is your friend

The reality is your retirement could stretch out to 40 years, and you need to keep this in mind when you're planning for it. I usually advise clients to think of it as two stages:

• the first 10 or so years of retirement, when you are likely to be fit, active and open to taking on new challenges
• the remainder of your retirement years, when you are more likely to stay in one place.

For example, it may be that you plan to keep your beach house as a second home for a while after you retire. While there is the added expense of having a second home, it might be an important place for you to recharge your batteries, making it easy to justify keeping it. In addition, it's a useful asset to keep up your sleeve, so to speak, and that might be part of your retirement strategy. If you should be unlucky and find, for whatever reason, your finances don't hold up as well as you were hoping, you have a second property you can sell at some point down the track to...