Retirement is not a single purchase – it has no fixed cost, not even a fixed length. Your post-work life consists of your standard living costs, but depending on the lifestyle you want to lead you might face additional expenses that need to be accounted for.

This is why it’s so crucial to not just blindly save for a far-off idea, but to establish a tangible post-retirement plan. With the right amount of foresight and a solid strategy, you can live the dream. Here, we discuss the financial planning steps you should take.

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1. Picture your retirement

The best goals start with a dream – some broad, overarching idea that represents the first drops of ink on the pages of your retirement plan.

Ask yourself what sort of retirement you’d like to live. Will you spend your permanent holiday abroad? Or perhaps you picture spending more time with your family? The way Australians are retiring today is looking increasingly different from the retirement plans of their parents. With a longer retirement phase and improved health and wellness in your mid to late 60s, you should expect to have more energy and time to live an exciting retirement.

Will your retirement take you around the world?

From this dream you can begin to flesh out the finer details, like where you’ll live, any hobbies you plan to pick up and of course, where your retirement income will come from. Knowing these things will help you understand the lifestyle you plan to live, and thereby shape your savings goals and strategies in order to afford your dream retirement.

If you’re not sure what you want out of your retirement, download our interactive worksheet to find out.

2. Establish spending and withdrawal strategies

Equally important to determine how you’ll save money is deciding how you’ll spend it. You need to strike a balance between ensuring you don’t run out of your savings too quickly and living post-retirement life to its fullest.

In some ways this is a lot like a budget – it’s an itemised plan designed to ensure your expenditure stays in check. However, it differs from a budget in that it is not necessarily supported by a renewable income. In many cases, retirement income is drawn primarily from superannuation benefits and possibly the pension. This can, of course, change with a clever diversified investment strategy outside of superannuation, but a significant 47 percent of Australian pre-retirees report having no such investments, according to Empirica Research.

The pace with which you withdraw income from your assets is also an important consideration. Incorporating a transition to retirement income stream in your plan may help you ease into post-work life and save more money for potentially greater fees in the future (such as medical bills or residential care). Alternatively, you might prefer to withdraw large amounts upon retirement to travel while your health allows it.

3. Make the most of downsizing

The concept of downsizing has long been used by retirees and empty nesters who feel overwhelmed by the maintenance obligations and possible loneliness of larger homes.

As of 1 July 2018, however, downsizing is also an attractive option for retirees seeking to maximise their superannuation benefits and turn their dreams into reality. Australians 65 years or older are able to contribute up to $300,000 of the proceeds from the sale of their long-term primary residence into their superannuation accounts.

This raises an interesting question – is your family home a part of your retirement plan? Letting go can be difficult, especially when countless memories have been made in your home. However, you may find that your lifestyle is easily transferrable to another, smaller property. Particularly if you plan to travel, moving to an accessible apartment or in with family can provide you a comfortable enough home to return to between overseas excursions.

When downsizing could be the difference between a frugal retirement and a permanent vacation, it’s certainly worth thinking about.

4. Be prepared to adapt

While building a plan is paramount to a comfortable retirement, it’s equally important to make sure your plan is flexible. Rising costs of living present a significant concern to 69 percent of Australian retirees, reports Empirica.

Further to this, retirement is a time in your life when unwelcome and costly surprises may rear their heads. While many don’t like to think about potential health complications, failing to account for the worst-case scenario can easily do more damage than good.

5. Work with a compassionate financial planner

There are countless costs, opportunities and nuances to be considered before and during retirement, which can easily become overwhelming. A compassionate financial planner can work with you to determine your goals and build a flexible strategy to address your ever-changing needs.

Get the most out of your post-work life. Work with the financial planners at Invest Blue today.

What you need to know

Disclaimer format: This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.