Imagine a day in your life when you are not required to clock time or go to work, but you are still free to work on your passion projects. When your financial stability means that you are pursuing work only for your pleasure and to bring meaning to your life. When you can decide how you spend your time and you still receive your paycheque.
This isn’t a farfetched dream. In fact, this is what a successful retirement plan sounds like. And it could be your future reality as you reach closer to retiring.
But here’s the catch – it won’t happen by accident!
Like any new chapter in your life, your retirement too requires organisation, preparation and planning. It may not be half as exciting as other aspects of financial planning, but it is easily one of the most crucial ones. It is the aspect that bears maximum impact to you and your lifestyle and requires fair consideration.
Here in this week’s blog post, we uncover 5 pillars of successful retirement planning that will guide you on your journey – What are the essential considerations? What are the blind spots? When is the right time? What about your super? And, who can provide help and advice?
Pillar 1: Essential Considerations
Despite the obvious benefits of retirement planning, as per a study, only 44% of Australians over the age of 40 years are actually prepared for it. It is important to develop a comprehensive retirement plan. If possible, consider developing your retirement plan as a part of your overall financial plan.
Here are a few essential considerations to take into account:
What will you need to live your preferred lifestyle? What is your cash/liquidity requirement?
What are the ways in which you can control your costs? What are the ways in which you can continue earning?
What are your risks? What is your tolerance to those risks?
What activities do you have on your to-do list? How can you plan for them?
Are there any government entitlements that you could apply for? How can you check for your eligibility?
What about your investments and insurance?
Have you considered estate planning?
Pillar 2: The Right Time
There isn’t any fixed time and age of retirement in Australia. That being said, your health, financial situation, job situation, super plans, personal preferences or your partner’s needs can play a role in determining when and how you retire.
The average age for retirement for Aussies is 55.3 years. But there’s an increasing trend of retiring later in life. When you narrow the criteria down to people who’ve retired in the past five years, the average increases to 62.9 years. Also, retirement isn’t necessarily a one-time event with many retired Aussies joining the workforce each year.
Pillar 3: Superannuation Strategy
Your super is a critical part of your retirement plan, and it is surprising how often it is treated only as an afterthought. It can be helpful to seek timely professional advice on your superannuation strategy as there can be differences in the implications depending on your approach and/or specific situation.
Generally speaking, you can start accessing your super when you reach the preservation age, which is between 55 and 60 years, depending on when you were born.
Pillar 4: Impact of Debt
While planning for your retirement, you may want to consider if you want to carry any debt into your retirement. Debt can ultimately reduce the amount of money that you enjoy during your retirement. If you don’t pay off your debt before you retire, a significant portion of what would have been your retirement income can end up going towards paying off your debt from many years ago. This can add to your burden and increase your costs while your earnings are limited.
So, it may be prudent to think about ways to reduce (or ideally eliminate) your debt.
Pillar 5: Help & Advice
Retirement planning today is very different from what it was 20 or 30 years ago. Even the wider economic conditions are different. For one, we may be required to save up bigger amounts to fund longer retirements given that our average lifespan has gone up considerably.
It can be immensely helpful to have an experienced and qualified adviser on your side - guiding you through your retirement planning process and helping you achieve your desired financial goals.
We, at Oakmont, would be delighted to help you plan your retirement and make the most of your golden years. Call us for a confidential discussion.
General Advice Disclaimer
The information contained on this website and in this blog-post is general in nature and does not take into account your personal situation or circumstance. It is recommended that you consider and use the information provided responsibly, and where appropriate, seek professional advice from a financial adviser.
Although, every effort has been made to verify the accuracy and correctness of information, Oakmont Financial Group, together with our consultants, officers, agents, and employees, disclaim all liability for any loss or damage suffered by any persons directly or indirectly relying on this information.