Let’s start with an ordinary month

What would you like to have available to spend?

You might already have a figure in mind. We can start there, then look at what it includes.

Groceries, electricity, rates, insurance, meals out. Any mortgage or rent. The cost of running the car and looking after your health.

Then there’s the spending that makes retirement yours. A holiday, golf membership, weekends away or seeing family interstate.

I’ll also want to know about bigger expenses coming up. If you’re planning to replace the car in two years, we need to account for that somewhere.

We work backwards from the life you want to fund. We look at what you have, what income it could provide and how long it may need to support you.

That lets us test whether the amount you’d like to spend looks realistic. If it doesn’t, we can explore what would need to change. If it does, you have something more useful than a vague hope that you’ll be okay.

You can still have a payday

Once we’ve assessed the spending, we can look at how the money will reach your bank account.

Depending on your circumstances, it might come from your super, investments, some paid work or the Age Pension if you’re eligible.

An account-based pension, for example, can pay regular amounts from your super into your bank account once you meet the access rules. You can usually choose a payment frequency, subject to your provider’s options and the withdrawal rules.

If monthly payments suit the way you manage money, we can explore that.

You know when the payment is coming. Your bills and everyday spending have money allocated to them. You can see how the month is meant to work.

That familiar routine can help with the adjustment to retirement.

Give the money a clear job

It can also help to organise your spending into a few separate accounts, or clearly labelled amounts.

For example:

• 01

  Everyday spending

  Your regular bills, groceries and usual weekly spending, with an allowance for annual costs.

• 02

  Holidays and larger purchases

  Money you’ve planned to use for trips, replacing the car or doing work on the house.

• 03

  Personal spending

  An amount for the things you enjoy buying, without having to revisit the whole retirement plan each time.

• 04

  Your buffer

  Cash for the unexpected costs that would otherwise leave you worrying.

Separate accounts and regular transfers can make a budget easier to follow. The arrangement should suit how you manage money.

If we’ve included the holiday in the plan and checked what it means for your finances, having money set aside for it can help. You can see that spending it serves a purpose you’ve already considered.

We also work out how much to keep accessible and how the rest of your money will support the years ahead.

Drawing on your savings doesn’t tell the whole story

It’s easy to picture your retirement savings as an account that only gets smaller.

But money that remains invested can continue to earn returns. Those returns will vary, and some years will be negative. What matters is how withdrawals and investment outcomes work together over time.

I model this with clients because the result can be different from what they expect.

In some projections, people can draw an income and still have substantial assets left later in life. In others, they use some of their capital along the way. We need to understand which picture fits their spending and circumstances.

The modelling gives us a way to examine that. We can allow for inflation, fees and different investment outcomes, then review what actually happens.

A falling balance doesn’t, on its own, tell you whether your plan is going off track. We need to compare it with what we expected the money to do.

Check before committing to another year of work

“We’ll work another year, just to be safe.”

There may be a good reason to do that. You might want to clear debt, build your buffer or finish something you enjoy.

But if the reason is that you haven’t checked whether you can afford to stop, I’d encourage you to find out.

You may discover another year would make a useful difference. You may find that reducing your hours would work. Or your current position may already support more than you thought.

Leaving the question unanswered can mean putting off plans without knowing whether you need to.

They help us assess what you need. Then we work through the practical arrangement for paying yourself.

You don’t have to arrive with everything worked out. Bring a rough idea of your spending, your super and savings, and whatever is worrying you about finishing work.

We can sit down and check what the next stage could look like, including what happens in your bank account after that final pay.

Michael.