July 27, 2022 Julie Hyslop

A Question of Retirement

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The questions we ask ourselves when thinking about retirement are often broad and varied. In our twenty’s we may have asked ourselves is it necessary to start planning for retirement when I am still trying to pay back my student loans? In our thirty’s we can begin to ask ourselves what are my retirement goals for the future and how much do I need to fund them? In our forty’s retirement may begin to feel a little more real as we begin to ask ourselves am I on track to having enough money in retirement? In our fifty’s we often begin to ask ourselves when? When is the right time for me to retire and when will I feel ready both emotionally and financially?

The thoughts and questions we have regarding retirement are often dependant on our life stages, however there are some key questions we need to ask ourselves no matter what age we are:

– What are my time horizons? Creating a broad picture of the years between your working life and retirement enables you to establish a realistic budget and strategy.

– When do I start planning for retirement? The earlier you start saving for retirement the more money you will have, especially considering the principals of compounding interest and how this works in your favour over the years https://www.incomesolutions.com.au/financial-superpowers-join-forces/

– How often do I review and update estimate retirement expenses? Regularly, at least yearly, review and update estimate expenses making decisions to put more money into planning for retirement as your income grows. Maintaining your current lifestyle when receiving a pay increase can be a great way of increasing investments and superannuation savings.

– What is my risk tolerance? Regularly review and update your risk tolerance and profile as this can change as you transition through the decades to retirement.

– What can I do to ensure I maximise my options to increase the money I have for retirement? There are a number of factors that include Consolidation of funds, Salary Sacrificing and After-Tax Super contributions.

– Can I ensure I use my Superannuation to achieve the maximum tax benefits? There are many tax effective options concerning superannuation and it is important to seek financial advice from an Adviser with expertise in this area.

A core and often asked questions of course is How Much? How much money will I need to live when I am retired and no longer earning an income. Obviously, this will depend on your earlier stated goals and retirement objectives, however The Association of Superannuation Funds of Australia (ASFA) provides the following table as a general guide, although it is worth noting that these figures depend on people owning their own house outright:

Where will this income come from? A variety of sources may provide us with this income including superannuation, investments, savings, inheritance, or government benefits.

This outline provides a picture of the complexities concerning Superannuation and Retirement Incomes and illustrates the importance of collaborating with your Financial Advisor throughout the decades to ensure a smooth transition to Retirement.

Referenced for this article:

https://moneysmart.gov.au/retirement-income/transition-to-retirement

https://www.investopedia.com/articles/retirement/11/5-steps-to-retirement-plan.asp

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