Retirement Planning

The outcome of most of the surveys conducted is that only 19% of Australian are positive and are looking forward towards their retirement. This is a very sad fact but it is also true that you can live the best of your life and  avoid a big mess in your retirement if you do your research. In any situation planning is always the first step towards being more confident and positive about the next chapter in life.

Planning your retirement is extremely essential for you to live without stress once you are done working. This means you have to understand your superannuation retirement account, you should budget your lifestyle the way you want and most importantly get your finances in order using professional Financial Advisors help. don’t worry, we are here for you.

Today I will be clearing up the following points on this page. make sure to read the entire article to have a peaceful retirement life –

• Understanding your superannuation
•  contribute to your super
•  access your super
•  understand and know your lifestyle
•  getting finances in order
•  talking to a financial advisor
•  the connection between debt and retirement
•  Having a practical budget
•  setting money aside planning for the unplanned

1. Understanding the superannuation

If you do not already know what superannuation a k a super is, it is basically the retirement fund,  fully filled with money, which you would have kept a side to access after your hard working days.   There are several practicalities of having access to your super. Let us find out the specific way to save and how to access your super for retirement.

2. Contribute to your super

If you are an Australian employee, you would know that every Australian employer makes sure that you put a minimum of 9% of whatever you earn as your salary into your super for your future.

For example –  let’s say that you earn about $85,000 a year. Out of this you will be asked to put $7650  into your super account.  this  9% is again created and regulated by the law.

Nevertheless,  $7650 is nowhere close enough for you to live even a decent lifestyle after your retirement. 

In fact, the present generation, 18 year olds are recommended to save at least 12 percent of their salary in the name of their superannuation accounts.  On the off chance that you are older than 18, it is on the wiser side if you decide to set aside around 20% of your annual salary.

This is also well worth as you will not be taxed for your superannuation account money and therefore putting aside a higher amount will bring you a reduced tax rate

3. Access your super

Of course you can access your super completely at the age of 65 years, but if you are still working and require to access your super account, you can always do so if you are in your preservation age. Your preservation age is anywhere between the age of 55 years and 60 years. Your financial adviser can assist you in figuring out what your preservation age is depending on the time of your birth and also decide the best time for you to retire by connecting the dots to the amount of money you will have in your super account.

In any case, there are a few ways in which you can obtain this income.

• Annuity sums – These provide you with a very stable sum of money every year during your retirement. it is up to you if you want this annuity sum to last for a fixed number of years,  until your life expectancy or throughout the actual life of yours.
• Lump sum –  This is an option which will allow you to access your entire superannuation sum in just one go. This particular option has its own sets of pros and cons but if you do not have a good financial adviser, it is preferable to look into another option.  If you do have professional help then this is a very easy way to access your superannuation money.
• Account based pensions – This is one of the ways in which your superannuation turns into a regular income. The size and frequency of the transfers into a super account in your bank can be something that you can get to choose. In this way, this option gives you some amount of control on your lifestyle so that it helps you to budget on your own.

4. Understand and know your lifestyle

As stated above, it is essential that before planning your retirement in the financial sense you have an idea of how much amount you require for your preferred retirement lifestyle.

It can be comforting to know that most Australians actually retire with more money than they initially had.  This money does not only contain the 9% salary which is set aside by your employer for your superannuation but it also involves the annual income which you will continue to get so that you can fund your preferred quality life in your retirement.

Let’s get this clear for you. If you are aiming for a modest lifestyle, for an individual, you would require around $25000 a year. On the other hand if you are looking at a more comfortable, extravagant lifestyle, you would need around $44000 a year.

If you’re having trouble deciding what your preferred lifestyle is, then ask these questions to yourself.

• What kind of home are you planning to live in and where will that home be?
• Are you planning to travel inside your country or aim for international trips?
• How frequently do you want to eat outside?
•  If you love entertainment, how do those expenses look?

Once you answer these questions honestly, you will know how much you will require in your super and in turn find out how much to save throughout the years, until your retirement.

5. Getting finances in order

Now that you have understood how superannuation works and you have an idea about how you want your post retirement life to look like, It is the right time to get your finances in order. You can read up some tips and hints to budget for your retirement life so that you can make your dream retirement life a reality.

6. Talking to a financial adviser

Getting a financial adviser is key and it is the first step towards getting your way through your post-retirement finances. they are professionals who have the knowledge and tools to help you in figuring out the amount of money you currently possess, the amount of money that you have to set aside and the amount of money you need to allocate in certain places to maximize utilisation of your fund resources.

Before selecting a financial adviser, you have to do a certain amount of homework from your end. Look at your potential financial Advisers portfolio and see the kind of clients the adviser has worked with and make sure that these clients are similar to you.  

This will mean that you will be having a financial adviser who is familiar with you as he would have worked with people having similar financial backgrounds and similar lifestyles. a person who has worked with such people has more experience and will be able to offer more expert advice.

Do not forget to make sure that the financial adviser that you are planning to consider is legitimate. You can do so by looking at their credentials at the farm they work for. Just in case you do not find any evidence of experience then it means you have to look elsewhere. Once you finalize your financial adviser and reach out to them, you can discuss all factors with them like your debt, future Savings and budget.

7. The connection between debt and retirement

If you do have any debt, then it is advisable that the first thing that you would want to discuss with your financial adviser is how your death will impact your retirement life.

A survey confirms that around 29% of Australian houses are known to be over-indebted. This debt constitutes over 120% of Australia’s overall GDP. This is not great news for those who will very soon retire so, if you do have a lot of debt in your name you may want to have some extra money in your retirement budget so that you can pay off these debts.

8. Having a practical budget

You have to consider keeping some money aside for essentials like home payment, insurance, food etc. On an average each month food will cost you $370, rent will be $2,600 and other utilities will end up at $200. 

You will need to add in more considering personal care, entertainment, clothes  based on your lifestyle as this varies from individual to individual.

If you want an early retirement with less money, you can have this too by having a talk with your financial adviser about downsizing your house.  There are several beautiful houses in retirement communities which cost much less than what you are currently paying, so it is wise to look into that option too. this will make room for other things in your budget which you always wanted to do but never had the chance for due to work.

9. Setting money aside

When you are budgeting, it is not only necessary to keep some money aside for the essential but also for those personal things that are important for you. things that you are always wanted to do but never have the time for you to  work. retirement is all about time. all you have is time day in and day out. 

If you are passionate about new hobbies like Golf or Tennis lessons, it is necessary to keep some money aside for these expenses as they are just as important as the other ones.

10. Planning for the unplanned

This may seem very cliche but planning for unknown possibilities can never get old. Life is very unexpected. You can plan but you can never predict.  It is necessary for you to keep aside some money especially for medical treatments as it is only natural that you begin experiencing health issues and doctors sometimes cost an arm and a leg.

Lastly, Retirement planning has a lot of aspects which thinking only during retirement is not enough and has to be given away before it.  it is never too late to start retirement planning but postponing it might not be the best idea. take a book, plan your finances, know your income, draw your preferred lifestyle, talk to a professional and get started on retirement planning today.