Your retirement may feel like a million years away. But so did finishing high school when you were in prep – time really does fly.
That’s why a bit of prep for your retirement now (with a financial plan) can save you from a lot of stress when it’s high time to stop working.
Review your super
Take a careful look at your superannuation savings and think about whether this will be sufficient to fund your ideal retirement. How much you need will depend on your lifestyle, your healthcare needs, how long you live and whether you have other investments you can draw on.
As you prepare for retirement it can be worth taking every opportunity to grow your nest egg. Some options include using salary sacrifice to make before-tax super contributions rather than receiving all of your wage or salary in the hand. The earlier you save for
Making a contribution out of your own pocket using after-tax money will also help to grow your super. If you’re a low-to-middle income earner this may make you eligible for a government co-contribution.
Develop a financial plan for retirement
Retirement involves making the switch from a regular wage or salary to living off your investments including super. This makes it important to look at ways to make your money last longer, and a sensible strategy to achieve this is developing a long-term financial plan. It should address your changing income needs as you age, and how your investments can be put to best use to fund your lifestyle.
Expert advice can make a valuable difference when it comes to making a financial plan for retirement – and provide peace of mind that you have your money under control.
Understand how your spending will change
Retirement can bring significant shifts to household spending. Costs associated with being in the workforce such as weekday travel, are likely to drop significantly, though you may spend more on leisure activities like hobbies or travel. Later on, your health-related spending may change.
Drafting a retirement budget will give you a better idea of how your spending patterns will alter in retirement, and how you can manage your new cash flow. This is an area where good advice also pays off, and your super fund may be able to put you in touch with a professional financial adviser.
Preparing for retirement can be both exciting and daunting ( The Golden Girls certainly didn’t let age slow them down). With some careful and well-thought-out planning, you can take away many of the uncertainties and enter this new phase of life with confidence and a healthy super account.
This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.