Your dream retirement is a well-deserved reward after years of working, but it actually requires preparation as early as now.
To mention some, you might want to think of setting a retirement age, securing your retirement income and laying time-bound goals.
Check out this beginner-friendly guide on planning your retirement with FAQs and tips that may make the transition easier!
What are the four basic steps of retirement planning?
To make sure your retirement goes smoothly, we have narrowed down the most important preparations into four basic steps.
Step 1: Make a list
List goals and to-dos upon retirement to help you understand your needs and priorities.
Sketch your idea of your post-work life, like your home arrangement decisions, and list down essential information on your personal funds to secure the lifestyle you want.
In a separate list, write the things you need to accomplish. Add things like work and personal transactions as well as the people you need to contact in doing such.
Step 2: Estimate your budget
Understanding your financial situation is the most important part of retirement. While you are still capable, seek financial advice. This will help you spend your money wisely and plan your finances better.
Here are the three main finance-related concepts you should account for in budgeting your retirement funds:
A superannuation fund, or super, is the money from your employer saved for your future financial needs. Superannuation may help you receive stable money for a certain time.
In the span of your working life, 9-9.5% of your salary is deducted from your monthly salary income, on top of tax and wages, as mandated by the Australian government.
Your super is usually paid by your employer into super contributions depending on your chosen fund scheme and is deposited in your super account.
To access your super, you may receive your superannuation once you become a 55-60-year-old, making you eligible for an age pension once you retire.
An alternative option to access part of your superannuation balance is through a transition to retirement pension (TTR). In choosing how to receive your super money, you must take into account additional costs like tax deductions.
Investment is critical in building your retirement money. This can make or break your lifestyle decisions and dream retirement.
One of the benefits of smart investment is it acts as your preparatory funding with lesser financial fluctuations compared to when you are closer to retiring.
It is best if you would get a separate account for your long-term investments and seek professional help from well-rounded investment advisors.
As years go, medical expenses, home reconstructions and service costs also increase. Preparing your savings can help you get these bills paid with an allowance for leisure.
Since you will spend most of your time at home, having enough pocket money could also help you find the most fitting retirement home with lesser restrictions.
You might also want to compute your super and non-super funds accurately, as this may affect the movement of how much you can save within a year for your retirement savings.
Step 3: Clarify your eligibilities
Your eligibility for government support is highly affected by your loans and debts. Minimise instalment payments and double-check your insurance coverages as well.
This is also helpful when you find your retirement home since lesser eligibility would mean retirement villages might be your best living option.
Step 4: Plan out your retirement scheme
Once steps one to three are taken care of, you need to create a hypothetical timeline using the information you gathered about your finances, eligibility and retirement needs.
Finalise your living arrangements and seek help or advice from trusted retirement experts if you find it hard to deal with these processes alone.
3 Useful tips when planning for retirement
Enjoy a trouble-free retirement by following these three useful tips:
1. Create a safety net.
To ensure your savings will last you well in the long run, always anticipate your future expenses before making purchases that could cost your debts to pile up.
2. Invest and buy wisely.
Seek information regarding market stocks and analyse your risk tolerance as early as now.
Whether you choose low-return or go for high-return investments, you could study your investment options and strategies on investments to find the best fit for you.
3. Study multiple income options.
Do not limit yourself to the super or your age pension, as this is not a lifetime offer for retirees.
Also, take note that different means of accepting your super balance may incur varying tax costs depending on your age, so it is important to seek advice about your super account before choosing your means.
Here are some additional information on the most frequently asked questions by your co-retirees.
- Is there a right age to retire? No, but it would be best to retire when you are already eligible for age pension (i.e. 66 and older)
- How much can I start saving up for my retirement? Voluntary contributing to your super above the minimum requirement is a good starting point. Instead of 9%, you can pay higher, say around 10%, if your salary allows.
- Is it worth it to seek a professional financial expert for this matter? It would be best to seek personal financial advice from experts for possible income options and retirement benefits.
Some may think that retirement planning is not a need at a young age. However, doing so can save you the trouble of sacrificing the retired life you want due to restricted financial means.
With the hustle and bustle of retiring in Australia, you might want to consider finding insightful materials and relevant networks to enrich your knowledge on the subject.
Check out Aged Care Weekly for the latest news, articles and useful guides, which aim to help aged seniors and retirees achieve their dream retirement easily.