Working for your future

DON'T leave retirement planning too late. That's the message from experts, who say the earlier you start thinking about what to do in retirement - and how to fund it - the better.

"Without being unkind, there's not a lot of coming back from a poor decision in retirement planning," the chief executive of National Seniors Australia, Michael O'Neill, says. "You make a bum decision when you're in your 20s, you've got the rest of your working life to recover from it. Something that happens with adverse consequences in your 60s or 70s, there ain't no coming back."

How soon should you start planning?

At least five years before, says the director of Jordan Financial Solutions, Damien Jordan, a certified financial planner.

"I'm saying minimum but I've got people in their late 30s already starting the planning process with us," Jordan says. "Many people don't understand how much money they will need to retire comfortably. Sometimes, it's a big reality check."

And just how much a person will need depends a lot on what they plan to do when they stop working and how long they live. Men now aged 65 could expect to live for a further 18.7 years and women 21.8 years, data from the Australian Bureau of Statistics show. Many people live much longer than those averages though, so having extra funds available is sensible.

The United Nations says Australia's life expectancies are among the highest in the world. For males born today, only boys in Iceland, Hong Kong and Switzerland can expect to live longer. Life expectancy at birth for Australian females is exceeded only by girls in Japan, Hong Kong, France, Italy, Switzerland and Spain.

Part of your retirement planning should take into account what insurance you may need. Jordan always advises his clients, if they can afford it, to take out private health insurance. Another vital cover, O'Neill says, is ad hoc travel insurance, especially to countries such as the US, where the cost of medical care is high.

However, some insurance policies, especially those covering a reasonably fixed cost, such as a funeral, may not provide good value for money.

"Think about whether the benefit is really there or whether you're potentially paying substantially more than the benefit you're going to receive from the policy," O'Neill says.

Retirees in a strong financial position may also be able to lower their premiums by accepting a higher excess on some policies. Another way to cut the cost is to consider bundling policies and asking for a better deal.

When planning retirement, it can be helpful to consult an adviser, such as your accountant or a qualified financial planner.

O'Neill urges a broad focus. "Sometimes what [people are] inclined to do is focus solely on the financial side," he says. "It also needs to be about how a person might deal with retirement, the kinds of interests that you might have, having clear expectations about relationships and understanding that your relationship, if you are in a relationship, is going to change because you're under each other's feet much more."

One of the main things to do when thinking about retirement is to ask questions. "It's your money, frankly, and you want to make it go as far as you can," O'Neill says . "And that means basing it on good research, good advice and thinking about the issues involved."

Tips for planning Start planning for retirement as early as you can at least five years before you stop working.

Think about what you would like to do in retirement and if you are in a relationship, talk to your partner about his or her expectations too.

Understand what you spend your money on now and where you could cut spending to boost your retirement savings.

When it comes to insurance, weigh up the types you need. Read the fine print to understand what you are covered for and question whether, for some lower or reasonably fixed-cost items, you might be able to save for a specific time rather than take out an insurance policy.

Tips for planning

Start planning for retirement as early as you can at least five years before you stop working.

Think about what you would like to do in retirement and if you are in a relationship,

talk to your partner about his or her expectations too.

Understand what you spend your money on now and where you could cut spending to boost your retirement savings.

When it comes to insurance, weigh up the types you need. Read the fine print to understand what you are covered for and question whether, for some lower or reasonably fixed-cost items, you might be able to save for a specific time rather than take out an insurance policy.