Planning for Pre-Retirement

By Dean Godbee

Active Super Financial Planner

As the saying goes, “Live your best life.” Sounds great, doesn’t it? But have you ever thought how you might actually achieve it? 

If you have, ideas like “freedom” and “financial security” may come to mind. While we know money can’t buy happiness, there is little doubt that feeling financially secure can provide peace of mind, comfort and the freedom of having the choice of doing what suits you. This becomes increasingly important the closer we get to retiring from work. 

When we’re younger and just starting out with our careers, our financial priorities typically include things like buying a house, having a family, putting kids through school and providing them with an education. Later in our working life our thinking and focus can gradually shift towards setting ourselves up for our eventual retirement, and we can find ourselves asking “how can I prepare myself financially for a comfortable retirement?”

The good news is your team at Active Super can offer help and support. Over the years, we’ve provided our members and their families with invaluable assistance to prepare them for retirement, even if their retirement might be a few of years away. 

By tapping into our experience and expertise, there are a number of strategies that you could potentially consider leading up to retirement to help boost your superannuation balance.

Salary Sacrifice

You could ask your employer to deduct some of your salary each pay period to be contributed into your superannuation. Not only can this provide an easy and convenient way to add to your superannuation, it can also help save you tax if these contributions are made from your pre-tax salary.

Add to your spouse’s superannuation

Another possible strategy is adding to your spouse’s superannuation. This can be done in a couple of different ways, including making a spouse contribution using any savings you may have, or it could also involve using a strategy known as super contribution splitting. This is where you can have some of the money that’s been contributed to your superannuation throughout the year ‘split’ to your spouse’s superannuation account. Depending on your finances, each of these strategies could provide you with some tax savings.

Transition to retirement

Rather than simply going from full-time work and then ceasing work altogether, many employers allow workers to adopt a ‘transition to retirement’ arrangement which might involve reducing the hours you work in the years prior to eventually retiring. This is not only beneficial as it can reduce stress levels and ease us into retirement, but it also potentially offers the ability to contribute more to our superannuation before we stop working completely.

Downsizing the family home

It’s not uncommon for the family home to get too big for us as we near retirement, particularly if the kids have moved out and we become empty nesters. So a number of us sell the family home and downsize to a home that is smaller and more manageable, which can also mean we have money available to use as a result. Depending on your situation, these funds can be added to your superannuation as ‘downsizer contributions’. 

Even better news is that from 1 July 2022, this strategy will be available to even more people as you may be able do this from the age of 60 onwards (circumstances permitting), rather than the current age requirement of 65 or older.

These are just a few examples of strategies that you may consider to increase your superannuation while you’re still working and a few years away from retiring. Getting the right advice about these strategies and others can make a sizeable difference to how you might be able to live your life in retirement. 

Contact us so we can help you “live your best life”.

*Dean Godbee has been a financial planner for over 20 years, specialising in the areas of superannuation and retirement planning.


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