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Financial Planning For Retirement

Updated: Aug 4, 2023

financial planning for retirement

Retirement may seem a long way off, but planning for it can never start too soon. It makes sense why - we’re living much longer lives than we used to. Once our grandparents thought they only had a few good years left after retirement. These days, it is reasonable to expect many of us to make it well into our eighties, if not nineties.

With the current retirement age in Australia now officially 66 years and six months, much of the population can expect to live at least another two, if not three or even four decades after their careers come to a close. That sounds great - provided you have the funds to stretch the distance. Relying on the Australian pension as a sole means of income is not quality retirement advice.

That’s where ActOn Wealth comes in.

Smart financial advice for retirement planning

There are typically two approaches to planning for retirement.

One understands that sooner is better. The other is more of a hustle - a realisation that time seems to be moving faster than expected, and this golden watch could be on your wrist before you know it (not that many businesses seem to offer up the golden watch these days…!). We’re here to support you with a strategy for either scenario. Regardless of where you are in the timeline, there are some key steps you need to take when planning to retire. Let’s explore them here.

How much do I need to retire?

 loaded question

This is a loaded question that relies on answering others at the same time.

  • When do you want to retire?

  • How much do you currently spend?

  • Will you be mortgage-free by retirement?

  • What lifestyle do you expect to lead?

A general rule of thumb suggests your post-career pot needs to provide 80% of the income you’re on at the point of finishing your work life. So to keep calculations clean, if your salary was $100K when you retired, then you want to have enough funds to provide yourself with $80,000K per annum moving forward. Obviously, you have no idea how long that piece of string (number of years remaining) might be. However, it does give you an idea of the size of the pot, doesn’t it?

Knowing how much money you need to generate before you graze in the good paddock is one way to look at this. Now let’s say you have a nest egg and you want to know how long it will last. You may have heard of the 4% Rule? It suggests that however much savings you have at the point of ending your career, you rely on 4% of this figure per annum (adjusted, of course, to inflation) for 30 years.

However, at the end of the day, these numbers and this kind of forecasting are fairly loose. Rest assured, we’re here to make the calculations a lot more specific so that your plan isn’t pie in the sky. But they do make a sobering point - very few of us will be able to retire without having made a plan quite some time before the big event.

Start saving. Now.

You might be reading this at the age of 20, 30, 50… Wherever you are in life, start saving. You can never be too young. However, at some point, unfortunately, it will be too late to start saving and expect a substantial effect. Understanding cashflow and budget planning are a big part of this preparation. We often meet first-time clients who really fear the B word. They regard it as being Lifestyle Public Enemy Number One, something that will take away all the fun and pleasures in life. Don’t worry! We are not the austerity police. This is not about Peter robbing Paul - we know how to work with you and build a budget that saves you money without sacrificing the day-to-day.

Contribute to your superannuation fund

Making personal contributions to your super fund can help offset your tax and grow your wealth for those golden years. Again, you don’t want to be in a situation whereby contributions compromise your present-day lifestyle. Thanks to our research over the years for many other clients, we know the best super fund for retirees. We can work with you to strike a comfortable balance that will enable you to continue to enjoy the present but be smart about the future.

Be mortgage-free

A mortgage is, of course, the single biggest expense most of us will ever undertake. Chances are this is the biggest piece of your expenditure pie right now, yes? And right now, you’re employed. Think of what those monthly repayments would be doing to your bank account if you didn’t have incoming money each month. Insurance and utilities will always need paying, and they are significant enough. Let’s work out a property investment and payment plan that will see you enter this next chapter of life without such expenses hanging over you.

Clear your debt

Speaking of mortgages, let’s also consider debt in general. It’s important to eliminate any form of debt before you enter those golden years. Credit cards, loan providers, gambling, whatever the form, we need to work to wipe the slate clean. You enter this next stage of life without anything hanging over you.

How does retirement look to you right now?

What are you going to do with yourself when you’re no longer working nine to five? What does comfortable look like to you? What are your must-haves, what are your needs, what are your wants? How confident are you about your health? Let’s remove the numbers for a moment and talk pictures instead - how you see yourself living these good years. As your retirement planning wingman, we have to be clear about that vision so we can put in place a reasonable, achievable plan.

Contact a specialist retirement planner today

If you’re running a search for a financial advisor for retirement planning near me, you’ve stopped at just the right page. We love our numbers, and we love helping our clients achieve their lifestyle goals. Merging these interests is what we do best. Contact us today, and let’s set up a no-cost, no-obligation catch-up to see how we can help you in planning for retirement.

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