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Following on from our last article – Preparing for Retirement in your 20’s, 30’s and 40’s.

We continue to guide you through planning for retirement in your 50’s and 60’s.

50’s

When you’re in your 50’s retirement may still seem a long way away – but it will creep up on you.

In your 50’s your emphasis should be adding to your super contributions to boost your retirement savings, retirement education, debt trimming, and saving or investing your money.

Retirement timing

At this point and time in life, you may think you have idea of when you may be able to retire.

But when you intend to retire and when you in fact finally retire, all depends on the assets to support your retirement. The longer you postpone retirement the smaller the asset base required to support your retirement or the higher the annual income you can enjoy while in retirement. The number one rule should be, “don’t be in a hurry”, unless there are health or other factors beyond your control.

If possible, rather than retire hurriedly, consider reducing your working hours gradually over time – this is particularly true if you continue to enjoy your work and plus your super will continue to grow.

Review your retirement plan

What's your plan for retirement?
The more often you review your finances, the more likely you are to make progress and reach your goals.

Review your investment mix in your superannuation and consider whether you need to start de-risking your portfolio and move away from aggressively invested growth options. If retirement beckons in the short to medium term you should be particularly looking to build a sustainable portfolio with perhaps an emphasis on greater income and reduced volatility/risk.

Consider a transition to retirement strategy

If you want more financial flexibility, a transition to retirement strategy or TTR strategy, may be worth considering if your aged between 55-60 and still working, it will allow you to:

  • Continue to receive super contributions – This helps to replace the money you take out.
  • Pay less tax – If you are 60 or older, your TTR pension payments are tax free. If you are 55 to 59, your pension is taxed at your marginal tax rate, but you get a 15% tax offset.
  • Ease into retirement – You can start planning what you’ll do with your leisure time before you retire completely.

You can use a TTR pension to grow your super and pay less tax in the lead up to retirement. This strategy works best if you are 60 or older and a mid to upper income earner.

TTR strategy can be very complex, so it’s worth talking to financial planner to under if this strategy is right for you.

60’s

By the time you hit your 60’s, you would of hopefully paid off all your debts and be paying extra into your retirement savings and getting ready to finally enjoy your retirement years.

Review your retirement savings

It’s vital to frequently review your retirement savings, you may be behind where you want to me from your super savings, there’s still time to make some tweaks to your retirement plan.

Pushing back your retirement date may give you time to recuperate any losses you may have faced. Alternatively, you might decide to follow through with your plans, and accept that your retirement income might be smaller. No matter which approach you choose, keeping an open mind and a flexible approach can make it easier to adapt to economic uncertainty.

Learn to live more sparingly

If you’re unhappy with the amount you have to spend in retirement, selling your house and downsizing to less expensive house and using this cash to boost your super balance, may be the answer.

You’re less likely to have dependents living with you, downsizing into an apartment or a smaller home – you’ll save money (reduced utility bills) and time (less space to clean). Think about selling furniture and other objects that you no longer need, including big-ticket items like a second car. Tightening your belt on the big things means you’ll still be able to afford the luxuries you’ve been counting on enjoying in retirement.

Downsizing in retirement

downsizing
It’s now that you really need to conduct a super health check and review your strategy to ensure that its working for you. Compare your super fund and check whether you’re on track to having enough super to retire on.

Most super funds allow you to choose from range of investment options and asset classes and choosing which is appropriate comes down to the individual choice, risk, and time available to invest.

At this stage of your life, setting yourself up with a financial plan will ensure you have the money in retirement to last the distance. This is when you may need some professional advice from a financial adviser and put a financial plan in place.

Set up an emergency fund

An emergency fund is money you can put aside to cover unexpected or urgent expenses. This could be car repairs, urgent funds needed for your property or healthcare.

If you put $20 a week into a savings account, you’ll have over $1,040 by the end of the year. That’s the start of a good amount of savings to give you some financial breathing space.

A good target is to have enough in your emergency fund to cover three months of expenses.

We hope that our two-part blog sessions have helped you on the way to stress free retirement, where your retirement savings will last the distance.

If you need some further advice to get your retirement plan up to speed, get in touch with Oracle today!

Important information – Oracle Advisory Group makes no representation or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. The information in this document is general information only and is not based on the objectives, financial situation or needs of any particular investor. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek their own professional advice. Past performance is not a reliable indicator of future performance. The information provided in the document is current as the time of publication.
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