Archive for February 2015

The three stages of retirement

Australians are living longer than ever before. So it’s important to be financially ready for retirement – and the changes to your lifestyle along the way.

While it’s great that we’re living longer, it means we need to be better prepared financially for our later years. It’s also important to realise that our lifestyle is likely to change during retirement, with each stage having particular financial needs. Of course, every person is different, but here’s a broad overview of what each of the three retirement stages could look like for you.

Early retirement

Early retirement usually begins in your early 60s and can last right up to your mid-70s, depending on your health and energy levels. The main focus should be on enjoying the free time that comes from no longer having to work – or perhaps only working a few hours a week on the things you really enjoy. This may allow you to spend more time with family and friends, start a new hobby or take those trips you’ve always dreamed about.

This is likely to be the most expensive time of your retirement, with much of your spending going on travel and leisure activities, or perhaps to help your children or grandchildren get ahead financially.

You may also decide to renovate your home, now that the kids have gone and you’re spending more time there.

If you’re working part time, you may have extra income on top of your super or age pension. But even then, you’re likely to choose more conservative investments that focus on preserving your wealth for the years ahead.


Your mid-retirement period might start anytime from your late 60s, and may continue into your early 80s.

During this stage, you may find your energy levels slowing and your desire to travel or participate in more active hobbies diminishing.

You may also decide to downsize to a smaller home, which involves managing the costs associated with buying and moving to a new property. What’s more, the money you put away from the sale of your house could also reduce your age pension entitlement, so make sure you talk to your Western Pacific financial advisor before making any major decisions.

At this stage, you’re less likely to be earning any extra income from work. You may also spend less on travel and leisure, shifting your financial focus towards taking care of your health.

Late retirement

During the final stage of retirement, you may need to pay for extra support to maintain your home and take care of yourself. Your health is also likely to need more attention.

As your accommodation and healthcare needs change, you may decide to move to a retirement village or nursing home – a transition which needs particular financial attention. It’s also essential that you’ve put your affairs in order through proper estate planning.

Five keys to a happy retirement

PERMA is an acronym that describes five conditions that positive psychologists say will lead to ‘authentic happiness’ at any age. Think of PERMA as the values that you should have that result in a happy retirement.

1. Positive emotion

We know that optimists do better in retirement than pessimists, and that ‘other directed’ people do not fare as well in retirement as ‘self-directed’ people. As you look at your retirement, are you excited or are you apprehensive?

As someone once said, happiness is the way you live your life and not a desired state of being!

2. Engagement

In retirement, it is easy to become disengaged from day-to-day life if your concept of ‘being involved’ comes from your day-to-day work. Those people who are more likely to go out with friends, undertake activities and to remain mentally active feel more like they are ‘alive’ and enjoy more successful retirements.

3. Relationships

Human beings are not meant to be on their own; we need other people who we can care for, have fun with and expand our horizons. However, relationships need to be positive to have the most impact on our overall retirement happiness.

4. Meaning

There is a big difference between ‘fulfilling’ activities in retirement over ‘time-filling’. Retirement is the time to look at the meaning of life and to focus on living a life of value.

5. Achievement

Self-image has a significant impact on our mental outlook, our relationships with others and our desire to continually feel good about ourselves. It is easy to reflect on our success at work that has disappeared now that we are retired.

We need to win small and large victories no matter how old we are.