Planning your Lifestyle in Retirement

I often ask all my clients, no matter their age, “When do you want to retire?” and “What kind of lifestyle do you envision for your retirement?” Surprisingly, many haven’t given it much thought!

It’s crucial to consider these questions early on because the type of lifestyle you want in retirement will shape how you save and invest today. Based on a breakdown of different retirement strategies or lifestyles—comfortable, modest, and dependent on the Age Pension—it’s clear that the choices you make during your working years can greatly affect your retirement experience. Let’s explore these options.

1. Comfortable Retirement

A comfortable retirement allows for a higher standard of living with more leisure and comfort. Key features include:

• Travel and Leisure: One annual holiday in Australia, and the ability to take frequent short breaks.

• Dining Out: You can regularly eat at good-quality restaurants, enjoying a variety of food.

• Car Ownership: Owning a reliable and fairly new car ensures stress-free mobility.

• Lifestyle Perks: Regular haircuts at a good salon, private health insurance, the ability to afford bottled wine, and a range of leisure activities are part of this lifestyle.

• Home Maintenance: You can afford to replace your kitchen or bathroom every 20 years.

2. Modest Retirement

A modest retirement entails more restricted spending, with essentials covered but fewer luxuries. It includes:

• Travel: Occasional short breaks within your local area, but limited beyond that.

• Dining: Eating out is infrequent and usually in cheaper establishments.

• Car Ownership: An older, less reliable car is more likely, with repairs being an ongoing concern.

• Budget Restrictions: Private health insurance might be limited, and you’ll settle for less frequent haircuts and cask wine instead of bottles.

• Home Improvements: No budget for major renovations, but repairs are manageable.

3. Age Pension

For those relying solely on the Age Pension, the financial limitations are stark:

• Limited Travel: Day trips or very short local breaks replace holidays.

• Dining: Eating out becomes a rarity, often restricted to inexpensive takeaway or club specials.

• Lifestyle Constraints: You may struggle to afford regular haircuts, with friends or low-cost services becoming the norm.

• Home: Repairs are minimal, and addressing significant home problems may be out of reach.

Final Thoughts

Planning for a comfortable retirement involves saving diligently, investing wisely, and making informed choices about expenses. The key takeaway is that the earlier you plan, the more likely you’ll enjoy the perks of a comfortable retirement, rather than facing the financial restrictions that come with a modest or Age Pension-dependent lifestyle.

This comparison provides a clear picture of how different financial strategies and savings levels can impact your quality of life post-retirement. Whether you aspire to travel regularly or simply maintain a modest lifestyle, planning early is the key to achieving your retirement goals.