Having a clear idea of where you stand financially is the first step to planning the retirement you want.

If your working years are coming to a close, take some time to review your financial position and think about which of the following categories you might find yourself in.

Cash poor

Entering retirement without sufficient savings is a fear shared by many Australians, but the picture is by no means dire.

You might be able to cover essential expenses and achieve a basic standard of living by supplementing whatever savings you have with the Age Pension.

There’s also the option to continue working, even if only part-time. This can give you more time to build up your super and savings, as well as reduce the size of the nest egg you need.

If you plan to receive the Age Pension, just keep in mind that any income from work might affect the amount you’re entitled to. Fortunately, the Work Bonus scheme lets pensioners earn up to $300 per fortnight without it counting towards their income test.

The government also allows retirees to tap into the wealth in their home via the Home Equity Access Scheme (HEAS). Under the scheme, eligible retirees can access a non-taxable loan by using their property as security. The loan can be issued as a fortnightly amount, a lump sum advance payment, or a combination of both.

You can repay the loan at any time, and if there’s an outstanding loan after your death, the government will generally seek repayment from your estate after 14 weeks.

Getting by

Other soon-to-be retirees might have moderate savings but still not be as financially stable as they’d like. This might be because they have difficulty budgeting, are still making repayments on their mortgage, or have gifted their children a large sum of money.

If you’re in this boat, it might be worth maximising your super while you’re still working, either by salary sacrificing or making extra contributions. You and your spouse might also have to sit down and unpack your spending habits. If you can identify areas where you can afford to cut back, it might put you in a better position come retirement.

Downsizing to a smaller property might also help you free up cash or pay off your mortgage if you still have one. And if you’re over 55, you might be able to make a downsizer contribution to your super of up to $300,000 from the proceeds of the sale. This won’t count towards any of your contribution caps, and since it’s considered an after-tax contribution, no tax is paid as it goes in your account.

High net worth

If you’re a high net worth individual, you might have fewer financial worries as you approach retirement, but that’s not to say you’ll be able to sit back and enjoy the ride. Your retirement plan will probably be more complex than the average person’s, and likely filled with many more consultations with accountants, advisers, and other experts.

If cash flow is a concern, you might look into ways to free up money so you can spend more confidently in the future. For example, if you have a property portfolio that is still partly mortgaged, you might utilise a sell-down strategy to help reduce debt. This would have to take into account the tax implications, whether any deductions are available, and how much of your living expenses could be covered by the remaining rental income.

You might also want the flexibility to treat your loved ones. This might take the form of one-off gifts (to cover things like weddings or home loan deposits) or ongoing support (such as helping to cover the cost of education or children). Whatever form your generosity takes, you’ll have to be confident you have enough money left over to last you through retirement.

Finding what works for you

Approaching retirement can be daunting, but having a clear idea of the strategies available to you and the steps you can take to maximise your financial circumstances can be helpful. If you’re unsure what your retirement will look like, consider speaking to a qualified financial adviser.