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My Financial Retirement Plan

5 Factors to Consider for Your Financial Retirement Plan

First Published on: 2nd May 2022

Updated on: 11th October 2023


Devising your financial retirement plan is vital for a number of reasons. First, it can help you to ensure that you have enough money to meet your basic living expenses once you stop working permanently. Second, it can help you to maintain your preferred standard of living in retirement. Third, it can help you to protect your assets from inflation and other risks.

Different factors determine the success of a retirement plan, and it can help to understand what these are as you prepare for a financially secure future.

In this article, we will guide you through the major financial planning considerations to help you achieve your retirement goals and aspirations.

Factors to Consider When Planning For Retirement

1. Understanding Your Time Horizon

What is Time Horizon?Your time horizon refers to the length of time you have until you plan to retire or reach your retirement age. It is the timeframe over which you make, manage, and utilise your retirement investments.

Your time horizon is a powerful factor that shapes your retirement investment decisions. Let’s explore further how you can navigate and make the most of this time-based aspect of retirement planning.

a) A Longer Time Horizon Lets You Embrace Higher-Risk Investments

5 Factors to Consider for Your Financial Retirement Plan » financial retirement planPros and Cons of a Long Time Horizon in Retirement Planning

If you are in your 20s, 30s, or even in your 40s and 50s, consider yourself blessed. You can treat your longer time horizon as a valuable asset. Having several years before retirement affords you the opportunity to grow your money by capitalising on higher-risk but high-yield investments, such as equities and alternative investments.

While these may experience short-term fluctuations, historically they have shown a potential for huge long-term growth.

  • Real Estate Property: Over time, real estate property values tend to increase, and rental income can bring you a steady source of cash flow. Just remember that investment property requires careful research, and you might need to actively manage the property.
  • Managed Funds: Managed funds pool money from various investors to invest in a diverse range of assets like shares and bonds. They are professionally managed and have the potential for significant returns over the long term. Their diversification helps spread risks across multiple investments.
  • Equities (Stocks and Shares): Investing in equities, such as individual stocks or shares in companies, can offer considerable growth opportunities over the long run. However, keep in mind that the stock market can be volatile, and the value of individual stocks may fluctuate. Diversifying your equity investments can help reduce risk.
  • Superannuation Funds: Don’t forget about your superannuation account. To increase your super balance, your employer contributes regularly and you may also make voluntary contributions and salary sacrifice. A super fund typically invests in a mix of assets like shares, bonds, and property, in order to grow your retirement savings over time – you typically get to choose your asset mix.

b) Approaching Retirement Makes Income and Capital Preservation a Priority

5 Factors to Consider for Your Financial Retirement Plan » financial retirement plan

Pros and Cons of a Short Time Horizon in Retirement Planning

As retirement draws near, preserving the wealth you have accumulated over the years becomes a primary objective. It may be time to consider shifting your focus from high-risk, growth-oriented investments to a more balanced and conservative approach.

  • Savings Accounts: For short-term needs and if you need to access your money quickly, putting funds in savings accounts may be the best option. They are low-risk and provide a safe place to keep your money. However, keep in mind that savings accounts typically offer low-interest rates, so returns are generally modest and may not keep up with inflation.
  • Money Market Funds: These funds invest in low-risk, short-term securities, making them potentially suitable for preserving capital and generating some income. They are relatively low-risk and could offer better returns compared to a traditional savings account.
  • Certificates of Deposit: Certificates of Deposit (CDs) are time deposits with fixed terms and interest rates. They are a low-risk investment option, and the longer the term, the higher the interest rate. Just remember that withdrawing your money before the CD matures may result in penalties.
  • Short-Term Bonds: Short-term bonds with a maturity period of one to five years are suitable for a short time horizon. They offer more predictable retirement income options compared to stocks and can be a safer option during volatile market conditions.

2. Estimating Your Expenses During Retirement

Anticipating and saving for your future spending habits is a cornerstone of an effective financial retirement plan. Let’s explore how you can realistically estimate your retirement spending that lets you fulfil your aspirations and enjoy the retirement lifestyle you desire.

a) Track Your Essential Expenses

Begin by identifying your essential expenses, or the non-negotiable costs that you will need to maintain a comfortable standard of living. Examples are:

  • Housing: If you own your home, consider ongoing maintenance costs, rates, and insurance. If you plan to downsize or relocate, research potential housing options and associated expenses.
  • Health Care: Health care costs tend to increase with age, so include expenses for health insurance, prescription medications, and potential long-term health and aged care needs.
  • Daily Living: Calculate your average monthly spending on groceries, utilities, transportation, and other necessities to estimate how much income you’ll need to cover these basic expenses.

b) Plan for Enjoying Your Goals and Passions

Retirement is a time to embrace your passions, explore new hobbies, and pursue the dreams you’ve been postponing. When estimating your retirement spending, allocate money for these enjoyable pursuits.

  • Travel: If travel is on your bucket list, consider how often and where you would like to travel when you retire. Factor in transportation costs, accommodation, dining, and any planned excursions.
  • Hobbies and Interests: Whether it’s golf, painting, gardening, or any other hobbies you wish to indulge in, set aside funds to support your favourite activities and interests.
  • Gifts and Philanthropy: Account for any charitable contributions or gifts you plan to make to family members or causes close to your heart.

c) Prepare for the Unexpected

Life is full of surprises, and your retirement strategy should account for unforeseen circumstances that may impact your financial well-being.

  • Emergency Fund: Set aside a portion of your savings as an emergency fund to cover unexpected expenses like medical emergencies or home and car repairs.
  • Debt Management: Consider aiming to pay off outstanding debts before retirement to reduce your financial burden once you retire.
Tips For Creating a Realistic Estimate of Your Retirement Spending
  • Track your current expenses: Use a budgeting app or spreadsheet to monitor your current monthly or annual spending. This will provide a basis for your expense estimates.
  • Account for inflation: Factor in the impact of inflation when you estimate your retirement expenses. Keep in mind that prices tend to increase over time, so anticipate that your retirement expenses may be higher than your current spending.
  • Factor in lifestyle choices: Think about how you want to spend your retirement. Whether it’s travelling, pursuing hobbies, or socialising, your lifestyle decisions will affect your retirement expenses.
  • Include healthcare costs: Remember to include healthcare expenses, as they can be significant as you grow older. 
  • Be conservative: It’s better to overestimate than to underestimate your future expenses. Save up for more than you’d need.
  • Use a retirement calculator and other resources: Calculators and similar tools that help you simplify the process of estimating future income and spending are available online. You may also want to take a look at the ASFA Retirement Standard, a regularly updated resource, to help you create a budget for either a modest or comfortable lifestyle when you retire.

3. Assessing Your Risk Tolerance

When it comes to retirement investments, one size doesn’t fit all. Let’s explore the significance of risk tolerance in retirement planning and how you can strike the right balance.

What is Risk Tolerance?

What is Risk Tolerance?Risk tolerance refers to your willingness and ability to handle fluctuations and potential losses in the value of your retirement investments. It reflects your comfort level with taking on different levels of investment risk to achieve your retirement goals and affects your financial decision-making.

Your risk tolerance is influenced by various factors, such as your money situation, investment knowledge, time horizon until retirement, and overall attitude towards risk. Remember, however, that risk tolerance is not a static measure and can change over time as your individual circumstances and financial goals evolve.

a) Rating Your Risk Tolerance

Risk tolerance is a subjective concept that varies from person to person. To assess your risk tolerance, consider the following:

  • Financial Goals: Consider your retirement goals, such as the living standards you wish to maintain and any specific financial aspirations you hope to achieve.
  • Time Horizon: Take into account the number of years you have until you retire. A longer time horizon can provide more leeway for recovering from short-term market fluctuations.
  • Emotional Resilience: Reflect on how you react to market ups and downs. Are you comfortable with temporary drops in the value of your investments, or does it cause anxiety?

b) Weighing Your Options to Balance Risk and Returns

Once you’ve determined your risk tolerance, it’s time to create an investment strategy that strikes a balance between risk and potential returns.

  • High-Risk Investments: Examples of these are shares and equity funds, which have historically shown the potential for significant long-term growth. However, they are also subject to greater volatility, and their value can fluctuate more drastically in the short term.
  • Low-Risk Investments: On the other end of the spectrum are low-risk investments, such as bonds and cash equivalents. They provide more stability and are less susceptible to market swings. While they may offer lower returns, they can act as a buffer during turbulent market conditions.

c) Reducing Risk with Diversification

Diversification is a crucial strategy in managing risk and enhancing the stability of your investment portfolio. By spreading your investments across different asset classes, industries, and geographies, you can reduce the impact of any single investment’s performance on your overall portfolio.

  • Asset Allocation: Determine the right mix of assets based on your risk tolerance and financial goals. A diversified portfolio may include a combination of shares, bonds, real estate, and other investment vehicles.
  • Rebalancing: Regularly review and rebalance your portfolio to maintain your desired asset allocation. Over time, some investments may outperform others, causing your allocation to deviate from your original plan.

d) Building Stability with Low-Risk Investments

While embracing higher-risk investments can lead to potentially higher returns, it’s essential to ensure a stable foundation for your retirement savings. Consider allocating a portion of your money to low-risk investments, such as:

  • Government Bonds: Government bonds are considered relatively safe and can provide a predictable income stream through interest payments.
  • Certificates of Deposit (CDs): CDs offer a fixed interest rate and a specific term, making them a secure option for short- to medium-term investments.

What Kind of An Investor Are You?4. Securing Your Legacy and Loved Ones with Estate Planning

As you plan for your retirement, don’t overlook estate planning. It is an integral part of your financial preparation that ensures your hard-earned assets are protected and distributed according to your wishes. Estate planning provides you with peace of mind, knowing that your legacy will be safeguarded and that your loved ones will be financially secure even in your absence.

Let’s delve deeper into the importance of estate planning and how seeking professional assistance can help you create a robust and thoughtful plan for the future.

a) Protecting Your Assets and Loved Ones: The Essence of Estate Planning

Estate planning involves making a series of crucial decisions about what will happen to your assets, property, and finances in the event of your passing. It is not solely about distributing your wealth but also about protecting your loved ones from unnecessary financial burdens.

  • Will and Testament: A last will and testament are foundational components of estate planning. This legal document outlines how you want your assets to be distributed and who will be responsible for administering your estate after you pass away.
  • Trusts: Trusts are another valuable tool in estate planning. They allow you to set aside specific assets for the benefit of designated beneficiaries, helping to avoid probate and ensuring a smoother transfer of wealth.
  • Advance Healthcare Directives: Estate planning also includes provisions for your medical care if you become unable to make decisions for yourself. Advance healthcare directives, such as a living will and a medical power of attorney, communicate your health and aged care preferences, and appoint someone to make medical decisions on your behalf.

b) Seeking Professional Guidance for a Well-Rounded Estate Plan

Estate planning is a complex and legally sensitive process that requires careful attention to detail. Seeking professional assistance from an estate planning solicitor can help ensure that your estate plan is thorough, legally valid, and in line with your intentions.

  • Customisation: An estate planning solicitor can tailor your plan to suit your individual circumstances and goals. They can provide personalised advice and solutions to address any specific concerns you may have.
  • Tax Efficiency: Estate planning solicitors can work with your financial adviser and accountant to help structure your estate to minimise tax implications, ultimately preserving more of your assets for your loved ones.
  • Regular Updates: Life is full of changes, and so are your estate planning needs. A solicitor can assist you in keeping your plan up to date as your family dynamics, financial situation, or legal regulations evolve.

c) The Importance of Life Insurance in Protecting Your Family’s Future

Life insurance can also make a big difference in securing your family’s financial future. It serves as an extra safety net to ensure that your loved ones can maintain their standard of living even if you are no longer there to provide for them.

Life insurance is a straightforward and affordable option that provides coverage for a specific period. It can replace lost income and help your family cover expenses such as mortgages, education, and daily living costs.

5. Seeking Professional Retirement Advice

Retirement is a significant life milestone that requires careful consideration of various financial and legal aspects. Consulting with an experienced financial adviser who specialises in retirement strategies can provide you with invaluable insights, a personalised strategy, and the confidence to make well-informed decisions.

Let’s explore further the importance of professional retirement advice and identify key experts who can guide you on this transformative journey.

a) The Value of Expert Guidance

Retirement planning involves a myriad of complex financial decisions. Seeking advice from a professional retirement financial adviser can help you navigate the complexities and discover solutions customised to your unique goals and aspirations.

  • Financial Advisers: A qualified financial adviser is a cornerstone of your retirement planning team. They take a holistic view of your financial situation by considering your assets, income, expenses, debts, risk tolerance, and retirement goals. A financial adviser can create a comprehensive retirement plan, recommend investment strategies, suggest other sources of retirement income, maximise your age pension and government benefits, and monitor your progress over time.
  • Estate Planning Solicitors: As mentioned earlier, estate planning is a crucial aspect of retirement preparation. Estate planning solicitors specialise in creating legally sound documents such as wills, trusts, and advanced healthcare directives. They can ensure that your assets are distributed according to your wishes, help minimise tax implications, and protect your loved ones from potential legal challenges.
  • Accountants: Accountants provide valuable tax advice and ensure that your financial decisions are tax-efficient. They can help you navigate complex tax regulations and structure your finances to minimise tax liabilities during retirement.

b) A Personalised Approach to Your Retirement Plan 

Each person’s retirement journey is unique, as this is influenced by age, lifestyle, risk tolerance, financial objectives, and other factors. Seeking advice from various professionals helps you in the following:

  • Assessing Your Retirement Readiness: Financial advisers can evaluate your current financial situation and project your retirement income needs. They can help you determine if you are on track to meet your retirement goals and recommend adjustments if necessary.
  • Investment Strategies: Financial advisers can create a well-diversified investment portfolio that suits your risk tolerance and time horizon. They can guide you in allocating your assets, managing risk, and choosing the right investment vehicles.
  • Estate Planning Solutions: Estate planning solicitors can tailor estate plans to protect your assets, preserve wealth, and ensure that your wishes are fulfilled regarding asset distribution, as well as health and aged care decisions.

c) Adapting to Changing Circumstances with Regular Reviews and Adjustments

Planning for your retirement is not a one-time event. It is a gradual process that requires ongoing monitoring and adjustments as your circumstances and needs change.

  • Life Events: Whether it’s a marriage, the birth of a child, a career change, or a significant windfall, life events can impact your retirement plan. Professionals can help you reassess and make necessary adjustments.
  • Market Volatility: Financial advisers can guide you through turbulent market conditions and help you stay focused on your long-term goals rather than reacting emotionally to short-term market fluctuations.
  • Regulatory Changes: Keeping up with evolving government regulations and policies is necessary in retirement planning. Professionals can keep you informed of any regulatory changes that may affect your retirement savings, pension, and other benefits, to help you make informed decisions accordingly.

d) Assembling a Retirement Planning Team That Works For You

Retirement planning is a dynamic process that involves a collaborative effort with experts. Seeking professional advice helps you create a strong financial plan, manage legal complexities, and achieve retirement goals confidently. Regularly consulting these experts helps keep your plan relevant, adaptable, and in line with your aspirations.

Leverage the expertise of a financial adviser, estate planning solicitor, and accountant to help you enjoy financial security, pursue your dreams, and embrace the freedom that retirement offers. Your team of professionals will be your partners in ensuring that your senior years are filled with prosperity and contentment.


Regardless of your current age or financial status, taking proactive steps to understand your time horizon, estimate your retirement spending, and seek professional advice can pave the way to achieving your dream retirement.

By setting clear goals, careful planning, making smart investment decisions, and building a collaborative team of experts, you can create a solid financial cushion that supports your aspirations and provides security for your family. Remember, whatever your age, it’s never too late to start planning for retirement. Every step you take now is a step closer towards a happy, comfortable life in your golden years.

Start Your Financial Retirement Plan with Newcastle Financial Planning Group

Financial planning for your retirement is vital to ensure a comfortable and secure retirement. You may need retirement advice from a professional financial adviser and additional professionals to help ensure that your retirement plan is sufficient for your goals and that your family is protected in the event of your death.

Are you in need of help with retirement planning in Newcastle? At Newcastle Financial Planning Group can ensure that your retirement will be spent doing whatever you want, wherever you want, and with whoever you want. Call us or book online to secure your consultation today


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