Recent Commonwealth Bank research shows that only 53% of Australian households are on track for a comfortable retirement. So how can you make sure your accounting clients are ‘retire ready’?

According to the latest CommBank Retire Ready Index, the journey into retirement may be challenging for many Australians – but it’s not all doom and gloom.

For starters, only 17% of households (either single people or couples) will have accumulated enough super and personal wealth to fund their retirement independently. But if you add the age pension into the mix, around 53% of households are on track for a comfortable retirement.¹

So what about the other 47%? The silver lining is that a further one in five (or 1 million) Australians will have at least 80% of the amount they need to retire comfortably.¹ That means a little bit of planning could give them the extra push they need to build a healthy nest egg.

And how can you help your clients get retire ready? If you’re authorised to provide financial advice, or you can partner with someone who is, here are three steps you can follow to guide your clients towards a happy retirement.

Step 1. Ask about their goals

To develop a suitable retirement strategy for a client, you first need to understand the kind of lifestyle they want when they leave the workforce. Start by asking what they hope to do with their time – for instance, do they want to take up new hobbies, embark on a round-the-world adventure, or perhaps make a sea change or tree change?

When you’re developing a retirement strategy, it’s important to have an accurate timeframe to plan with. So find out when your client intends to retire and work backwards from there.

Don’t make assumptions, as every client’s intentions will be different. Some may prefer to make a slow transition to retirement by dropping down to part-time work, while others will want to keep working as much as possible until the day they retire.

Step 2. Work out how much they’ll need

Once you understand your client’s retirement plans, you’ll be able to work out how much they’ll need to live on.

Get your client to draw up a household budget so they can tally their ongoing living costs – including things like groceries, bills and any outstanding debt repayments. Then, factor in estimates for occasional expenses like holidays, home renovations or vehicle upgrades.

With the average life expectancy in Australia currently at 82, your client should be financially prepared so they don’t outlive their savings.² And don’t forget that their lifestyle needs are likely to change significantly as they move through different stages of their retirement.

For example, in the early years after work, their spending might be focused on travel and entertainment. Then, later down the track, they may need to spend more on medical treatment and aged care services.

Step 3. Focus on super

A client’s superannuation balance can make an enormous difference to the kind of lifestyle they’ll be able to enjoy when they retire. For instance, for a 30 year old working today, super is likely to make up around 78% of their retirement assets, so they’ll benefit from a long-term super strategy.³ On the other hand, older clients may have an immediate need to grow their super balance as much as possible while they’re still working, so they can reduce their dependency on the age pension.

So it makes sense for clients of all ages to have a strategy in place for maximising their super. But even so, many clients don’t realise just what a useful savings tool their super can be. That’s where you can provide valuable guidance, by showing your clients the different options available to them.

Younger clients can take advantage of a long-term approach to topping up their super – for example, through salary sacrificing. By putting in a little extra from every pay cheque, they may be able to grow their retirement savings tax-effectively throughout their working lives. And if, at some point, they’re thinking of taking a career break or reducing their working hours, you can help them plan ahead so their super doesn’t end up taking a hit.

For clients who are closer to retirement, you’ll want to look at ways they can use their income to boost their super in these crucial final years of work, such as a transition-to-retirement strategy. Or, for instance, if they’re planning to downsize their home, they might want to consider putting any excess funds directly into their super.

But remember, the rules around super contributions are about to change on 1 July 2017. So no matter what stage of life your clients are at, make sure you guide them through any changes that might affect them.