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