If you’re thinking about retiring, or have recently done so, you’ve probably spent a fair bit of time wondering how to set yourself up financially. Giving up work and your weekly wage for good can be a scary prospect. But if you have a clear understanding of your financial position and a long-term plan to secure your future, you’ll be free to enjoy your retirement to the fullest.
According to ASIC’s Moneysmart guide, there are three important steps retirees should take:
- Take control of your finances
- Make a long-term financial plan
- Find ways to grow your retirement income
Here, we’ll take a closer look at each step, and offer some tips and advice to help you retire well.
1. Take control of your finances
No matter what stage of life you’re at, or how your financial situation looks, it’s never too late to get on track. The first step is to make an honest assessment of your current financial position. Calculate the value of your assets, which may include your house, your savings, and your property or share investments. Next, find out how much super you have, and when you’ll have access to it. It’s also worth looking at the new rules regarding super contributions for over 65s. Finally, do some research on the age pension to discover when it’s available, if you’ll be eligible, and if so, how much you’re likely to receive.
Getting all your assets and income recorded in the one place will give you the information you need to plan for the retirement you want.
2. Make a long-term financial plan
Now you know where you stand financially, it’s time to put together a plan that will allow you to retire in style and comfort. Your retirement plan needs to include both your short-term and long-term goals. In the short-term, you might go on that overseas trip you’ve always dreamed of, or even buy a caravan and hit the road. In the longer term, you might have plans to renovate your home, or maybe to downsize and move to a retirement community.
It’s a good idea to seek advice and assistance from a financial advisor who specialises in retirement planning. They can help you create a plan and offer solutions to any shortfalls. Having a long-term plan is the key to making your money last and living the retirement that you want.
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3. Grow your retirement income
Understanding your financial position and having a plan will take you far, but they are no guarantee that your money will last. To sure up your financial security in retirement, you’ll need to manage your spending and find ways to grow your retirement income.
When it comes to keeping track of your spending, a budget is key. So, draw one up and stick to it – but be sure to make it realistic and allow yourself a splurge here and there where possible. Speak to a financial advisor about your investment options too. They can provide advice on diversifying your investments to minimise risk, and can explain the potential returns and losses that you can expect. Investing in shares and property helps your capital grow and keep pace with inflation, which is a big plus, especially now that many retirees are living to their 90’s and beyond.
When you make the decision to retire, knowing your finances are in order is a great comfort. You can enjoy your new-found freedom from day one, without the cloud of money troubles hanging over your head. By accurately assessing your position, crafting a long-term plan, and having a strategy in place to grow your income, you’ll set yourself up for the retirement you want – and deserve.
Over to You
Have you got a money management tip for prospective retirees you’d like to share? We’d love to hear?
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