Can I afford to retire? At what age can I retire? How much do I need to retire
Now I’m retired how long will my money last?
Pondering the above questions are enough to make many of us feel anxious and unprepared. Retirement is a large change and like all significant milestones it requires planning and preparation for it to be a success.
Remember that after retirement Australians will spend on average around another 30 years living on the funds they have saved during their working life.
At Power2 we will help you to manage your finances and expectations on your way to retirement and, just as importantly, out the other side into your new life.
There are some common, yet avoidable mistakes that prevent many people from retiring ‘on time’. But with our help, you can steer clear of the mistakes that could derail your retirement.
Retirement planning tip one: Get Advice
Salary sacrifice – Contribution caps – Transition to retirement income streams – Centrelink Aged Pension – concessional contributions – Self managed super funds – Property – Shares…. The list goes on and on.
None of us have all the answers. We take our car to a mechanic and visit a Doctor if we are unwell. When it comes to planning for retirement we all need a professional who will look at our individual situation and then find the path to retirement that is best for us.
Retirement planning tip two: Understand what you can afford
How much income do you need to maintain your current lifestyle in retirement?’
This is a question most of us get wrong. If we guess too high it seems as though retirement is not an option. If we estimate too little (and this is more likely the case) things could get tough later on; forcing us to make drastic, unwanted decisions when we are less equipped to deal with them.
Keep in mind that, early on retirees spend more on travel, entertainment and eating out. In their later years, health care cost can escalate.
Retirement Planning tip three: Start Saving Now
Albert Einstein said, “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it”.
To have $1 million at age 65, a 25-year-old needs to save $345 per month for 20 years then never save another cent, assuming the investments earn 8% per year over those 40 years. A 45-year-old would need to save $1,698 per month for the next 20 years to reach the same goal.
While other factors may effect the above outcome it is still very clear that the sooner you start saving the better your chance of reaching your retirement goals.
There are many ways to save for retirement. Your Power2 Financial Planner can help you save far more efficiently and tax effectively, helping you reach you goal sooner.
Retirement Planning tip four: Keep your eye on the ball
One certainty in life is change.
Jobs change, children are born or leave home, housing and share markets rise and fall. Even when things are relatively stable in the physical world your own personal expectations and goals may change over time.
It is important that your retirement savings plan is continually updated so that it matches not just your current needs and objectives but also your future goals.
By meeting regularly with a Power2 Financial Planner you can be comforted with the knowledge that you are still on track and working towards a happy and successful retirement.