Many of us can’t wait until we retire. With nicknames such as ‘the Golden Years’ and the thought of being able to sleep in everyday, it’s understandable why so many people look forward to this time in their life. The truth is however, planning for your retirement is fundamentally important to ensure you get the most of you
1. Figure out when you want to retire
We’re living longer, with the Australian average life expectancy now at 85 years of age. In the days when pensions were paid upon retirement, payments would commence at 65. However, depending on your personal situation, you may want or need to continue working until 70 or indeed, you may wish to retire at 60. Due to tax advantages, a lot of people are opting for semi-retirement to keep some income trickling in and to lessen the impact of bringing your working lifeto an end overnight.
2. Calculate your retirement funds
With the pension no longer available to Australians, the single most critical factor in planning for your retirement is to ensure you accumulate sufficient funds to support you once you stop working.
To do this, you first need to figure out how much you’d ideally like to retire on. Ask yourself these questions: what sort of lifestyle do you want?Will you still have dependent children to care for or will you still have a mortgage and/or other debts? As you age, it’s highly likely that your health costs will increase, so make sure you account for this too. Some of these costs may not be covered by the public health care system either now or in the future. Be sure to also include possible sources of future income, for example, partial pensions or other welfare payments, capital growth in your assets and returns from any investments you have such as managed funds, stocks and shares. You’ll also need to think about how to structure your superannuation payments during retirement. You can choose to receive a lump sum, a pension or a combination of the two.
3. Fly the coop
If you’ve got kids and they’ve all left home, chances are you have more room than you need. This means more cleaning and maintenance costs and you may be able to significantly bolster your retirement funds by selling your existing home and downsizing to something more manageable and possibly more suitable for your later years.
4. Get your affairs in order
Make sure your Will is up-to-date and that all your personal and financial affairs are covered. This will preventany unnecessary legal and financial costs to you (if you partner passes away) or your immediate family. Make sure you consult experienced lawyers (e.g.Turner Freeman)who can help you develop a comprehensive Will that may cover things you hadn’t even thought about.
5. Keep yourself active
Staying physically and mentally active during retirement is essential for good health and wellbeing. This will ensure that you truly enjoy and relax this well-deserved time of your life.
If you want ‘the Golden Years’ to be just that, you need to carefully plan your retirement. You’re never too young to start investing and building your financial security, now and in the future. Make sure you consult professionals along the way to ensure your expectations and your actual experience of retirement; are one and the same.