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Financial Planning In Your 50s - How to Build Wealth

Updated: Oct 9


Financial Planning In Your 50s

If you’ve reached midlife and you’re wondering how to invest in your 50s or perhaps how to plan for retirement in your 50s, you’re not alone. This is a time when many Australians begin to take stock of their finances and future and realise the two are not always working hand-in-hand.


Don’t make the mistake of feeling you’ve left things too late - now is the best time to start building your wealth. Our financial advisors in Melbourne help clients around Australia to ensure they prepare for and get the most out of their retirement years.

Let’s meet one such couple, Paul and Natalie, to find out how their ActOn finance planner was able to help them - and their children.


Paul & Natalie’s financial considerations in their 50s


Paul and Natalie had sought financial advice from another firm in the past, but they had not reviewed their situation for decades. All that remained from this previous undertaking was expensive personal insurance policies. Good friends who had benefited from ActOn Wealth’s advice inspired the couple to come to us.

When our financial planners in Melbourne met with Paul & Natalie, their goals were to:

  • Retire within the next 10 years.

  • Establish an investment plan for their high school-aged children to help give them a head start.

  • Review and ideally improve personal insurance policies.

Both Paul and Natalie felt secure in their jobs, at the peak of their earning potential. With their home loan nearing completion, thanks to years of allocating their cash-flow surplus towards it, they began questioning whether they had enough assets to support their retirement comfortably. They wondered if all the effort put into paying off their mortgage would result in having to sell their home to fund their retirement adequately.

These concerns were not uncommon for a couple in their 50s. Moreover, recent fluctuations in their superannuation balances due to market volatility added to their worries, prompting them to question the suitability of their investment options in their 50s compared to their 30s.



How to prepare for retirement in your 50s - Natalie & Paul’s plan


Given the 10-year timeframe until retirement, it was crucial for Paul and Natalie to establish a plan to ensure the lifestyle they desired. Their financial plan encompassed some of the best ways to save for retirement in your 50s.



Budgeting & Cash-flow Management:

  • Determining the appropriate allocation of their surplus funds based on their various goals.

  • Assessing the need for extra debt repayments or reducing existing additional repayments.

  • Considering additional superannuation contributions and ongoing contributions to an investment strategy, or a combination of both.


Retirement Planning:

  • Assessing the type of retirement they are on track for.

  • Determining the level of income required throughout retirement, including goals beyond maintaining their current cost of living.

  • Evaluating entitlement to the age pension and exploring ways to maximise it.


Debt Management:

  • Reviewing the progress of their mortgage repayments and ensuring it aligns with their retirement timeline.

  • Assessing the optimal structure of their debt and evaluating the competitiveness of their interest rates.

  • Considering tax implications associated with their debt management strategies.


Superannuation:

  • Assessing the suitability of their current superannuation fund in terms of fees and performance.

  • Evaluating their investment mix within superannuation, taking into account their proximity to retirement.

  • Determining the best approach for accessing their superannuation funds upon retirement.

  • Assessing the need for additional contributions to meet their retirement goals.


Risk Protection:

  • Reviewing the relevance of their current personal insurance cover and adjusting it to match their current circumstances.

  • Determining the types and levels of cover needed for adequate financial protection.

Investment:

  • Evaluating whether their surplus savings would be better invested.

  • Identifying the appropriate investment vehicle, considering different goals such as gifting money to their children.

  • Assessing the level of risk suitable for their investment portfolio.

  • Clarifying their investment timeframe and purpose.

  • Addressing the funding gap if they wish to retire before accessing their superannuation.


Tax Minimisation:

  • Exploring strategies to reduce their tax liability.

  • Evaluating potential sacrifices involved in tax minimisation efforts.

  • Minimising future tax liability related to estate planning inheritance or gifted funds for their children.


Paul & Natalie’s successful financial planning


Paul and Natalie experienced several benefits as a result of their collaboration with their ActOn Wealth financial advisor in Melbourne:

  • The couple is on track to retire comfortably at age 60, having gained clarity on managing their cash flow from now until retirement. They successfully reduced ongoing fees within their superannuation funds, minimised their income tax, and optimised their insurance coverage for protection against illness, injury, disability, or death.

  • A structured budgeting and cash-flow strategy provided them with a clear path towards meeting their retirement goals. They struck a balance between debt reduction, additional superannuation contributions, and investments to maintain their current lifestyle while being on track for a debt-free retirement with sufficient income-producing assets to sustain their cost of living and fulfill additional goals like regular travel.

  • Their insurance policies were adjusted to accurately reflect their current needs, resulting in reduced premiums of $3,453 per year while maintaining appropriate levels of cover.

  • A review of their superannuation funds led to significant reductions in ongoing fees, saving Paul approximately $8,500 per year and Natalie approximately $2,300 per year. Their asset allocation within superannuation was aligned with their risk profiles and proximity to retirement. Moreover, a new superannuation contribution strategy resulted in Natalie saving approximately $14,000 in tax in a single financial year.

  • An investment portfolio was set up for Paul and Natalie's children through a dedicated investment vehicle. Initially funded by Paul and Natalie, the ownership will eventually transfer to their children without adverse tax implications.

  • By investing on behalf of their children, Paul and Natalie provided them with a head start, fulfilling an opportunity they wished they had when they were their children's age.


Inspired to learn more? Read this great article about our client, Julie, and how to prepare for retirement in your 50s.


Contact us about investing in your 50s


We hope Natalie and Paul’s experience has you wondering about how to build wealth in your 50s. It’s not complicated or costly with the right team on board. And it doesn’t involve lifestyle-compromising austerity measures! An initial cost-free consultation with our Melbourne financial planners will show you just how simple and straightforward this can be.

The best investments in your 50s begin here - contact us today.




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