Planning for retirement is more of a marathon than a sprint, but have you done enough to make it over the finish line in time?
If you’re 55 years old (or thereabouts), you’ve either reached the preservation age or are near enough to start thinking seriously about your retirement options.
At the preservation age, which differs depending on when you were born, you can access your accumulated super if you are retired. The Australian Taxation Office provides a full list of preservation ages if you want to check yours.
So how do you know if your finances and retirement planning are on the right track?
You need a good understanding of your financial situation before you can work out the effectiveness of your retirement planning. This means calculating your assets and debts.
Your assets are properties, savings, shares and other investments, while debts should include any personal or car loans, as well as mortgages, unpaid credit cards and owed taxes.
Subtract the total debt from your assets and add this number to the super you’ve accumulated so far to work out your current net worth. Does the final figure match your expectations?
By the age of 55, you should hopefully have an idea of what lifestyle you want in retirement.
The Association of Superannuation Funds of Australia (ASFA) publishes a Retirement Standard, which estimates how much you need to live modestly or comfortably in your golden years.
According to ASFA, a comfortable retirement for a couple requires more than $60,000 a year to sustain, while single people need nearly $44,000. However, these figures may seem either excessive or paltry for your dream retirement, depending on your personal tastes.
Could you retire now if necessary? How close are you to your magic retirement number? Let’s find out.
Financial planning tools are a great way of tracking the success of your retirement planning so far. Remember the figures you totted up in the previous two points? They’ll come in handy when using a super simulator.
Simply answer a few questions about your retirement intentions, including the age you’d like to stop working, your desired annual income after you finish employment and any lifestyle objectives.
The results should give you a good idea of whether you are currently saving enough towards your super to meet your goals. If you’ve been diligent about your retirement planning until now, you may be pleasantly surprised at the outcome – but what if you’ve strayed off track?
It’s never too late to fine-tune your financial planning, and there are plenty of options to boost your super savings.
If you’re roughly 55 years old and approaching retirement, the sooner you tackle any bumps in the road, the better.
You can make additional super contributions, ask your boss for a pay rise or opt for a slightly riskier investment plan. However, you may want to seek superannuation insights from a financial adviser before embarking on any of these paths.
— ato.gov.au (@ato_gov_au) August 17, 2017
Everyone’s dream retirement looks different, so one-size-fits-all financial planning doesn’t exist. A financial planner can examine your current situation, discuss your plans for the future and tailor a strategy specifically for your needs.
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.
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