If you haven’t given any thought to what your retirement will look like, now’s a great time to start. It might not be the most fun thing to think about – not when there are holidays to plan or houses to buy – but retirement planning is a vital part of your overall financial plan. Being able to live the way you want in retirement requires planning, thinking about your financial future, and taking steps to make sure you can afford the lifestyle you want. (See the general advice warning below.)
Examine your retirement needs
Before you can think about how to save, you need to know what you want retirement to look like and how your finances will affect it. Will you want to travel a lot? Downsize your home, or keep it and add a holiday spot? Will your home be paid off by the time you retire? Do you want to maintain certain investments in your senior years or would you prefer to be liquid? Then look at the income you’ll have – what your current investments are likely to provide, your superannuation, any income you can count on beyond that, and whether you’re eligible for other entitlements. A firm understanding of how you want to live and what you’ll have to live on helps determine how much to save today and when you can afford to retire.
Deal with your debt
Look at the debt you currently have and make a plan to deal with your bad debt. Not all debt is bad – good debt is part of a strategy that builds wealth over time, and owning a home can be good debt – but bad debt, such as high-interest credit cards, takes away from your wealth. Retirement will be less financially stressful if you reduce your bad debt before you retire, and preferably well before. Then check the other essentials: do you have a current will? Is your insurance up to date? Should your investments be reviewed? Is it worth making additional superannuation contributions?
Final thoughts
Once you know what you want retirement to look like and have an idea of your finances, you need a financial plan. Retirement savings don’t just happen with good intentions – it takes planning, saving and understanding which financial vehicles are best for you. Talking to us can help you sort out what to do now, in a few years, and as you enter retirement, so you’re as financially comfortable as possible.
General advice warning: This information is general in nature and does not take into account your objectives, financial situation or needs. Investing carries risk and past performance is not a reliable indicator of future results. Seek personalised advice from a licensed financial adviser before making any investment decision.