How To Prepare For Retirement In Your 60s

Especially if you have a fear of running out of money

Have you heard of FORO, or “Fear Of Running Out?”

The term has entered our lexicon amidst a growing malaise that superannuation, savings and age pension entitlements might not be enough to fund a comfortable retirement. A financial wellness report out this year suggests a startling gap between what Australians think they need to fund their retirement ($600,000) versus what they actually have ($400,000).

Janis and David, a couple in their 60s who came to ActOn Wealth for financial advice, know all about FORO. They were concerned about not saving enough for retirement. They were worried that their expected part-Age Pension would require them to make spending cuts during retirement.

Not enough to retire?

David & Janice’s finances

Superannuation Fund

The clients had low retirement savings, which is typical for people who only received mandatory employer contributions for a limited time. David’s decision not to make super contributions during his self-employed years further affected his balance. He regrets this choice and now has a fear of not having enough money to retire.

Financial savings and Age Pension contributions

Janis and David had downsized their home, paid off their debt and placed the extra money in a savings account. Despite this, they still worried they were not saving enough for retirement. Indeed, the combination of these funds and their superannuation balances resulted in a modest part Age Pension entitlement.

The couple was worried that using their own money to supplement their Age Pension income would deplete their savings too fast. This could lead to them having to make significant sacrifices or potentially not having enough money for retirement. Although Janis and David did not have extravagant expenses, they hoped to maintain their current cost of living and enjoy their post-work years.

Financial planning & investing in your 60s

Our recommendations for David & Janice

Considering the various factors that would impact Janis and David’s retirement, their financial plan needed to address the following aspects:

Budgeting & cashflow management

• Determining the income needed annually to cover their basic cost of living.
• Assessing the additional income required for a comfortable retirement.
• Accounting for increases in the cost of living and inflation.
• Identifying the ideal method for accessing the supplementary income to supplement their Age Pension.

Retirement planning

• Maximising their Age Pension entitlement.
• Assessing if their investment assets are sufficient to meet their cash-flow requirements.
• Determining the optimal asset structure for their retirement.

Superannuation planning

• Exploring avenues to increase the balance of their super funds, such as making additional contributions.
• Deciding on the best approach to accessing their superannuation balances, including considering an account-based pension.
• Determining the most suitable account-based pension for their specific circumstances.
• Establishing an appropriate investment strategy for their funds within the account-based pension.

Investment advice

• Evaluating the rationale behind retaining a significant portion of their assets in cash.
• Assessing the potential benefits of an investment strategy to grow their assets while drawing on them.

Tax minimisation

• Identifying any tax considerations related to their pension options.
• Implementing strategies to minimise the tax liability on inherited funds passed on to their children.

Retirement planning success

What David & Janice’s financial advisor achieved for the couple

We achieved many successful outcomes for Janis and David, including a detailed analysis of their budget and cashflow. This gave them a clear understanding of the income required to maintain their cost of living and enjoy their retirement.

By restructuring their assets, their Age Pension entitlement increased by 128%, and they gained an additional source of income guaranteed for life with no market risk.

Taking advantage of recent legislation, our financial planners in Melbourne facilitated the opportunity for Janis and David to boost their superannuation balances through home downsizing. As a result, their investment assets were placed in a tax-free investment vehicle that offered growth potential.

Through detailed projections, Janis and David gained peace of mind, knowing that by maximising their guaranteed sources of income, they would not deplete their assets throughout retirement.

Their fear of running out of money in retirement is now gone. Instead, they now have the confidence to transition to retirement without the worry of making sacrifices in the future.

Contact us about how to prepare for retirement in your 60s

Do you want to know how to enjoy retirement without going broke? Meet with the best financial advisors in Melbourne. No matter where you are on your financial journey, we’re committed and passionate about growing your wealth. We want to help you lay robust foundations so you can enjoy a comfortable, well-deserved retirement income.