Once you hit your 50s and 60s, retirement is no longer something happening far off into the future. In fact, it’s at your doorstep.
Now is the time to really figure out where you stand financially, reassess your long-term goals, and focus on planning your future.
Here are five smart financial moves that may make the next few decades the best years of your life.
1. Decide on your retirement lifestyle
With a clear idea of the type of retirement lifestyle you’re after, you can start implementing a plan to turn your retirement dreams into reality.
Some things to consider are:
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How often you would like to travel – and the types of holidays you’d like to take Your travel plans might have gone out the window for now, but that doesn’t stop you planning for the future
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Whether a sea change or tree change is part of your plan?
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Downsizing – or upsizing. What are your accommodation plans in the future?
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Do you want to provide financial assistance to your family?
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In your later years, what options would you like to have in relation to help and support at home, or perhaps in a retirement village or aged care facility?
Sometimes talking to a financial adviser can help you clarify your wants and needs as, in order to make an assessment of your financial situation, they’ll first need to understand your life goals and what your mainpriorities are. Often, they’re most valuable in helping you conceive a plan for your future, before they build a plan for your investments.
Once you’ve thought through the above, you or your adviser can calculate an estimate of your expenses. That gives you something to work with when it comes to thinking about where your retirement income will come from and whether you’ll have what you need. There are a widerange of sophisticated retirement calculators available to help you with this.
2. Increase your retirement savings
One way to ensure you can enjoy your desired retirement lifestyle is to add more into your super on a regular basis.
You can do this using your before or after-tax income. If you make a personal contribution, you may be eligible to claim a tax deduction too. This means you’ll reduce your taxable income and potentially pay less tax, while adding to your super balance. It’s a win-win!
Be mindful of contribution caps though. They limit the amount of super contributions you’re able to make each year if you want to avoid paying tax at your marginal tax rate rather than the concessional rate of 15%.
3. Pay off your debt
The lower your expenses in retirement, the longer your savings will last.
So, if you have significant debt, you should also have a plan to proactively clear that debt, such as mortgage repayments or personal loans. This will strengthen your financial position when you retire.
Speaking to a financial adviser can help determine the best way to reduce your debt as you move into retirement, while also making sure your saving towards retirement is on track.
4. Diversify your investment portfolio
At this stage in your life, you don’t want your investments to be derailed by external market factors which are out of your control.
Investing your money across multiple different asset classes—shares, property, bonds, cash—will help to lower your investment risk. This strategy—diversification—works because different investment types perform well at different times so if one area of your portfolio falls, another may be rising. Having a variety of investments helps balance out your overall risk.
You may also want to consider speaking to a financial adviser as they can review your investments to assess where you currently stand and determine if your investment portfolio needs adjusting.
5. Set up an estate plan or a will
An estate plan is a collection of legal documents that outlines how you want your assets distributed when you die. Crucially, it also includes how you want your health and financial decisions handled (and by who) if you’re unable to make them yourself.
Most estate plans have a will which names an executor to manage the distribution of your assets as you intend. A solicitor (or the Public Trustee) can help you with this.
In essence, having an estate plan in place can help you feel more confident about the future, knowing your loved ones will be taken care of, and that the legacy you leave behind is the one you want – we recommend you speak with a financial adviser. Please contact us on 03 6165 2666.
Source : MLC Insights December 2020
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