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How can I retire without debt in Australia?

August 9, 2017  |  #Debt Management #Retirement

Nearly half of the population are asking themselves 'how can I retire without debt in Australia?' according to recent research. Do you have a financial plan?

Whether you’re looking to pay off a mortgage in retirement, or you’ve relied too much on your credit cards, many Australians face entering their golden years with debt hanging over them.

REST Industry Super recently revealed that 46 per cent of Australians predict they will retire with debt. Of these, 25 per cent will still have outstanding credit card bills and 21 per cent will have not paid of their mortgage debt.

If you’re asking yourself ‘how can I retire without debt in Australia?’ here are some key tips depending on your age group. However, for a better understanding of your finances and planning for retirement, please speak to a financial adviser.

Younger generations

 Millennials and Generation Xers are in the best position to retire without debt in Australia, as they have the most time to accumulate wealth and pay off any arrears. Yet, Roy Morgan Research found that nearly 40 per cent of those aged between 30 and 34 thought retirement was too far off for financial planning. This figure falls to just below 17 per cent by ages 45 to 49.

While you’re younger, you have a number of options to avoid debt, including:

  • Make overpayments on your mortgage while interest rates are low;
  • Embark on higher-risk, higher-return investment strategies;
  • Consider leveraging equity through debt recycling and other ‘good debt’ solutions;
  • Talk to a professional financial adviser to plan a strategy.

 Approaching retirement

Younger baby boomers are now approaching retirement. The good news is that just 8 per cent of 55 to 59-year-olds think it’s too early for them to consider financial planning for retirement. The bad news is that if you’ve only just started getting your ducks in a row, you don’t have a lot of time left.

If you’re struggling to retire without debt in Australia, you may wish to consider:

  • Paying off mortgage debt with a lump sum withdrawn from your super;
  • Delaying retirement (REST figures show 29 per cent of older workers expect to do this due to debts);
  • Using financial planning tools to better manage your money.

In retirement

If you’re reading this and you’ve already finished work, you may be wondering ‘how can I pay off debt in retirement?’ Some of the options mentioned above still apply, such as using a lump sum from your super to pay off mortgage debt or speaking to a financial adviser to plan a strategy.

You could also:

  • Downsize your home;
  • Take up part-time hours for additional cash; or
  • Perform a financial health check to give you ideas about where you can make savings.

Would you like to discuss how you can retire without debt in Australia? We can get in touch.

What you need to know

This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.