Congratulations on reaching retirement! One of the key aspects of retirement planning and super is accessing your nest egg. With careful management, you can enjoy new experiences such as a Caribbean cruise, home renovations, or helping your kids reduce debt while ensuring your super lasts for over 30 years.
Celebrate retirement, but remember your super may need to support you for over 30 years. Eat too far into your nest egg in the early days and you significantly reduce the time that your super will last. This is particularly the case in a low-interest rate environment.
Take Ron and Val. They retire with a combined super balance of $800,000. At an interest rate of 4% pa, this nest egg will fund annual living expenses of $60,000 for 19.4 years[1]. Spending $100,000 on travel and renovations, and gifting another $100,000 to children, will shorten the nest egg lifespan to just 13 years.
Planning for big expenses in retirement is just as important as it is pre-retirement. Deferring expenses increases money lifespan and total income received.
Ron and Val could consider reducing travel plans, postponing renovations, and making small regular gifts to their children instead of a large lump sum.
Your super is there to help you enjoy life in retirement, but it’s a balancing act. A little restraint now may allow for more fun later, so talk to your financial adviser, start your retirement planning, and ask about how you can make the most of your super in retirement.
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[1] Does not take into account any age pension entitlement