Even if you don’t plan to retire until you are eligible for the Age Pension – there are small steps you can take now to achieve your retirement goals. Given your retirement could make up a large portion of your lifetime, the lifestyle you want to achieve is an important consideration and a starting point for setting your long-term wealth creation plans.
Follow our retirement tips, to ensure you’re in a position to enjoy your retirement for as long as possible.
Do you want to retire by a certain age?
While Australia doesn’t have an official retirement age, there are some factors to consider when determining what age you might stop working. You might retire when you’re eligible for the Age Pension, or when you reach your Preservation Age – the age when you can access your super.
Your retirement age might also be influenced by your profession, health, family circumstances, or individual preference. Retirement could reasonably span a period of 30 years or more, so the possibility that some of us may outlive our savings is not at all unrealistic. The main point to remember is, the earlier you retire, the longer you’ll be relying on your super and savings, and the more you’ll need to have saved to support yourself.
Add a little bit more into your super now
The first step is to consider asking your employer about setting up a salary sacrifice arrangement for your super. You could find, depending on your salary, you may save on your tax obligations. Super is a long-term relationship – the more attention you give it, the greater the potential. Even salary sacrificing a small amount now – like the cost of one takeaway lunch a week – can make a difference to your super balance over the longer term.
Review your investments approach
Looking at how your super is invested could make a big difference to your retirement savings goals. If you still have many years left in the workforce, you may want to look at what your risk appetite is, and consider a higher risk, higher return approach to your investment strategy. A Nexia Financial Adviser could help you work out what investment strategy may suit your needs.
Protection for the unexpected
If you have insurance in your super, you may want to check if your cover still suits you and your family’s needs.
No matter what your financial position is today, an unexpected event can see it all unravel very quickly.
Insurance cover can help so that if there is an unforeseen event, you and your family can hopefully continue to move forward – and it can lessen the impact to your retirement savings.
What’s on your to-do list in retirement?
It’s important to think about how you want to structure your time when you retire, well before you leave full-time work. It’s normal to have different views about what constitutes a dream retirement.
Think through your expectations about travel plans, making a sea or tree change and pursuing a hobby or even a new business. It’s also wise to consider whether and how you want to financially assist your children or care for elderly relatives. Or you might want to continue working part time, while balancing your other life interests. These factors should be taken into account when planning how you want to fund your retirement, as well as the type of lifestyle you will lead.
Look at your debts
Will you be entering retirement debt-free? The Australian Securities and Investments Commission (ASIC) conducted research into credit card lending. After reviewing 21.4 million credit card accounts, they found 18.5 per cent of people struggle with credit card debt. You do not need to be a part of this statistic if you take control of your credit card debt.
Repaying as much of your debts as possible before you retire, can make a big difference to your lifestyle and the funds you’ll have available in retirement. While building your retirement savings, also consider a plan to proactively clear your debt by using any free cash flow to reduce the amount you owe to strengthen your financial position. You may also want to consider any benefits gained from rolling your debts into one or using another provider that offers lower rates and fees.
