For many people, a pension may be the primary source of income for the second half of life. However, many people desire an additional source of income, so it's essential to develop a plan for managing your finances. To ensure a comfortable retirement, you may have to save more money or invest more now.
There is no specific retirement age in Australia, which means you can keep working until you want to stop if you are working. Retiring comfortably is important, and a healthy retiree, if they wish to, can be involved in a wide range of leisure activities such as traveling, joining sporting events, and enjoying cultural entertainment.
That is if they can save enough to support such a lifestyle. So the question is, how much do you need to save for your retirement? Here's what you need to know:
When Should You Start Thinking About Retirement?
Because there is no government scheme for you to claim pension and don't know when you may need to retire, it is essential to start planning early. The earlier you begin planning for retirement, the better.
If you wait too long to start planning, you may have to make tough choices to cut your spending. Starting your plan early will give you time to make the right choices.
How Much Do You Need After Retirement?
The first step to planning your retirement is determining how much income you need to survive in retirement. Once you know how much money you need, you can make plans to ensure you have enough money.
Your retirement income needs to account for all your expenses, including:
Home loans or rent
Phone and internet
As you work through your retirement plan, make sure you plan for a future that may last 20 or more years.
Can You Start Late and Still Live Comfortably When You Retire?
Yes, you can start a few years later than your peers, or even earlier than that, and still retire comfortably.
The key to your retirement is to save as much as possible and to invest it wisely. While you need to take care of your basic needs first, saving money for your retirement should be your second priority.
The good news is that the longer you save, the more money you will have—the power of compounding will work in your favor.
Talk to a financial advisor who can help you with your retirement planning to learn more.
How Can You Access Your Superannuation?
When you retire, you can access your superannuation through a pension. You can access your superannuation by starting an annuity at any time, as long as you are aged over 60.
However, there are tax implications if you start accessing your superannuation before you reach the age of 60.
Some people take out a pension earlier than 60, so it's vital to get advice before you make a decision.
How to Make Your Retirement Savings Go a Long Way
Simply having enough money to fund a basic lifestyle may not be enough for many retirees.
While living on a fixed income is great, many people retire and still have energy and time to pursue other activities.
When you plan your retirement, prepare for a lifestyle that lets you pursue your passions. If you want to travel, then plan for travel. If you love to be involved in sports, then prepare to be involved in sports.
Here are some tips to help you make your retirement savings go a long way:
Live below your means. If you live below your means, you may need to work less when you retire.
Aim to save 20 percent of your income for your retirement. Work longer. If you can continue to work until the age of 70, you could earn a lot of extra income. If you can delay claiming pension for five to seven years, you may get a much higher pension.
If you can delay claiming pension for five to seven years, you may get a much higher pension. Work part-time if you can to earn more.
If your company offers a defined contribution superannuation scheme, encourage them to contribute more to your retirement fund.
Planning for retirement is essential, and the earlier you get started, the better. If you are worried about whether you are saving enough, talk to a professional financial consultant to help you plan for your future.
Swell Financial Planning offers you the services of a seasoned financial adviser in Queensland who can help you prepare for your retirement. Contact us today and set up an appointment with our experts!