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Planning for Retirement: My kids have a great life but what about me?

Article By Brett Moxey | | Financial Planning

You’ve spent most of your working life trying to provide your children with the right start in life. That box is ticked – now what about you?

When do you get time to start enjoying the fruits of your labour – and do you even have enough put aside to do that?

Planning for retirement is something you should start many years before it happens. The ‘Big R’ can roll around a lot quicker than you expect – even if it seems years away still.

And retirement is not what it used to be. You may be thinking of reducing hours to tick off a few of your lifestyle goals rather than pulling up stumps completely. But can you afford to?

That’s the question that needs an answer sooner rather than later. Yes, even 10-20 years prior to retirement.

‘Better late than never’ doesn’t cut it when it comes to your financial security. Turning up on a financial adviser’s doorstep the day before you hang up your boots is not going to end well.

Planning for retirement starts with giving some brutally honest answers to questions so that you are clear on what needs to be done…

Will you be comfortable with ‘comfortable’?

People are now living longer. It’s more important than ever to plan your retirement and have a healthy pool of assets to enjoy a great lifestyle and tick off those bucket list wishes.

Many Australians aspire to have at least a ‘comfortable’ retirement. But what kind of annual income will you need to enjoy ‘comfortable’ by your standards? And how much does that mean you’ll need at retirement?

According to the Association of Super Funds Australia (ASFA), in order to enjoy a ‘comfortable’ retirement, single people will need an annual income of approximately $44,011 at retirement (aged 65) and couples $60,457 p.a.

However, if you look a little closer, this probably won’t match your idea of a ‘great’ lifestyle.

For most Australians, a ‘great’ lifestyle means maintaining the current level of spending power you have and adding extra for holidays/bucket list items.

For example: currently spending $80,000 p.a. + $20,000 for extras = $100,000 p.a. for a great lifestyle.

This is just pure living costs, not including financial commitments, such as a mortgage, rent or debt repayments.

Therefore, the key is to have paid off your mortgage and be completely debt-free by retirement. In fact, a good aim in planning your retirement is to pay these off well in advance of retirement age. Then you can then focus on building your nest egg with surplus cash flow.

Not enough to be comfortable? See an Adviser

No matter what your future plans are, the reality is that it usually involves something many people don’t have enough of – money.

A good starting point in planning your retirement is to determine your current financial position. It’s not as hard as it sounds.

You may wish to start thinking about the value of your assets and liabilities, and cash flow. This is Point A. Then work out your goals (Point B) and then introduce strategies to help you get there.

To help grasp your cash flow, try completing the Australian Securities & Investment Commission (ACIS) Moneysmart Budget Planner. It’s a useful tool to get you started.

The most appropriate strategies and investments will always depend on you and your goals. This is the bit that starts getting complicated and it pays to bring in the expertise of a financial adviser.

Contact us here if you need some assistance or advice to start planning your retirement.

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