The Importance of a Retirement Plan
Retirement is something you’ve looked forward to your whole life. You may want to travel, spend time with the grandkids or maybe finally fix up the old car sitting in your garage for 15 years. Whatever your dream retirement involves, it’s essential to have a plan. Whether you’re already thinking about retirement or simply planning the years ahead, being prepared by having a retirement plan can help you have the lifestyle you’ve been waiting for your whole life.
At Aurora Wealth, our financial advisor experts will help you develop a comprehensive retirement plan and offer personal financial advice that will give you peace of mind and help you set yourself on the path to a happy and fulfilling retirement.
There are a lot of factors to consider when planning for retirement. For example, you’ll need to figure out how much money you’ll need to live on each month, what kind of lifestyle you want, and whether you plan to stay in your current home or move elsewhere. But don’t worry – we’re here to help! Our team is dedicated to helping you every step of the way. This article will outline some key factors to consider when you start retirement planning.
Your Age
The first factor you need to consider when planning for retirement is what age you want to retire. Of course, when you retire is up to you, but there are some things to consider. Most importantly, when you have access to your super funds. In Australia, you can access your super between the ages of 55 and 60 – depending on the year you were born. Depending on your financial circumstances, retiring without access to your super can be difficult. Read more about how to know when you can retire here.Age is one of the essential factors in determining when you can retire. The earlier you save, the more time your money has to grow. This gives you the ability to retire later in life. On the other hand, if you’re older, you may not be able to work for as many years and will need to start drawing on your savings sooner. In addition, age impacts how long you can expect to live in retirement. The older you are, the shorter your retirement is likely to be.
As a result, you’ll need to ensure that your savings will last throughout your lifetime. Age is just one factor to consider when planning for retirement, but it’s important.
Superannuation Funds
For most people, superannuation is a crucial source of income during retirement. The money that you have saved up over your working life can provide you with a much-needed financial cushion in your later years. There are a few different ways that you can use your super to fund your retirement, depending on your circumstances. It’s also important to know how much money you have in your super, as this can affect when you can retire. Find out how much super you need to retire here
For example, you may take a lump sum payment, which can be used to top up your other income sources or cover one-off expenses. Alternatively, you may opt for an income stream that can provide you with regular payments to help cover your living costs. Whatever option you choose, it’s essential to budget carefully to ensure that your super lasts as long as possible. By planning, you can ensure you have the best possible chance of enjoying a comfortable retirement.
Age Pension
The government age pension is a payment from the government that can be used as income during retirement. To be eligible for an age pension, you must be of a certain age and meet specific residency requirements. The amount of Age Pension you receive is based on your income and assets. You can use Age Pension to help cover your living costs, such as rent, food and utility bills. Age Pension is paid fortnightly into your nominated bank account. You can also choose to have your Age Pension paid directly into your Centrelink Income Stream account. This can be used to help budget and manage your finances during retirement. The Age Pension Application process is notoriously difficult to navigate. Our Comprehensive Guide offers step-by-step instructions to make the process as easy as possible.
Your Retirement Savings and Assets
A person’s assets are anything of value that they own. This can include retirement savings, investments, property, and more. When budgeting for retirement, it’s essential to consider all of your assets and how they can best be used to support you. Savings, for example, can provide a source of income during retirement, while investments can help to grow your nest egg. Property can also be a valuable asset, providing a place to live and the potential for rental income. By taking inventory of your assets and understanding how they can be used to support you during retirement, you can develop a more comprehensive budget and plan for a comfortable future.
How to Determine Retirement Spending Needs
It’s a common assumption that a retired individual or couple will need 70% to 80% of their pre-retirement income to maintain their lifestyle. This is a good starting place, but it’s often proven unrealistic, particularly if they are still paying a mortgage or unforeseen medical issues occur.
The Association of Superannuation Funds of Australia states the average annual budget for retired couples aged 65-84 in 2022 is between $43,250 and $66,725, and for singles, it’s between $30,063 and $47,383. This is, of course, an average and lifestyle choices need to be considered.
One way to accurately determine your retirement spending needs is to consider your yearly expenses. It’s essential to have a realistic understanding of how much money you will have coming in, as well as any potential costs that may come up, such as medical bills or home repairs.
It’s also wise to have a contingency fund, as unexpected costs can occur during retirement. By planning and budgeting carefully, you can ensure that your assets will be able to support you throughout your retirement years.
Your Health
Your physical and mental health are both significant factors to consider when planning for retirement. Healthcare costs can add up quickly, and if a person cannot work, they may have difficulty saving enough money to cover those costs. In addition, a person’s health can affect their ability to enjoy retirement. For example, if a person is in poor health, they may not be able to travel or participate in activities they had been looking forward to.
It is essential to consider all of these factors when making a retirement plan. By taking steps to stay healthy and understanding the potential cost of health care, a person can set themselves up for a more comfortable retirement.
In addition, it is important to consider the impact of a partner’s health on retirement plans. If a partner becomes ill and requires long-term care, it can have a significant financial impact on the household. It may be worth considering insurance options that can support this situation.
Taking your health into account when planning for retirement can help ensure that you have the best possible chance of enjoying a comfortable retirement.
Staying at Home
You can stay in your own house. You’ve spent your life finely curating the perfect home; why would you want to leave? You don’t have to. Staying in your home during retirement can provide comfort and stability.
Plus, it can also potentially provide rental income or act as an investment property down the line for a profit. Keep in mind that maintenance costs may increase as you age, so make sure to factor those expenses into your retirement budget.
Downsize
Maybe you want to downsize. Perhaps the idea of a low-maintenance home sounds relaxing, you won’t have to mow the lawn or keep as many rooms clean. Downsizing can also help you save money on bills, maintenance and the house’s overall price. Additionally, it can lead to a simpler, more relaxing lifestyle that brings you increased joy.
Relocate
Retirement could be a great time to relocate to a new area. Perhaps you always said you’d retire in Queensland? Or, maybe you want to move closer to your grandkids. Retirement can be a great opportunity to create a new home in a new location. However, keep in mind that moving costs can add up, so make sure to budget accordingly.
Overall, it’s important to consider your living situation during retirement. Think about what will bring you joy, and make sure to factor in any potential expenses. Doing this allows you to set yourself up for a comfortable and satisfying retirement.
Travel
Retirement is often a time for travel. Now that you have more free time, it can finally be a great opportunity to visit those dream destinations.
It is important to remember that travel can add up quickly. Make sure to budget carefully and consider any potential expenses, such as international healthcare coverage or visas. It is also important to consider your physical abilities and any potential limitations when it comes to travel.
Overall, retirement is a great time to explore the world and if you plan well it’s sure to be an incredible experience.
Retirement Home
With thriving social activities and facilities, a retirement community may be the best option for you. Not only can they be a great place to find community but they also have medical assistance if that is required. If you are considering living in a retirement community, it is important to consider both the one-time cost of moving in as well as any potential ongoing fees. It may also be worth visiting and speaking with current residents to get a sense of the community and see if it would be a good fit for you. Retirement communities can provide a fulfilling and comfortable living option during retirement.
Your Goals
Retirement is an exciting time in life, gone are the responsibilities of the workplace and now it’s time to focus on what makes you happy. It’s important to consider what you want to achieve and do during your retirement. It’s also important to consider your financial goals. It’s never too early to start thinking about retirement and considering your financial future, and one of the most important things to consider is what your goals are.
Do you want to travel the world? Spend more time with your family? Pay off your mortgage? Whatever your dreams may be, it’s important to factor them into your retirement planning. After all, retirement is a time when you should be able to relax and enjoy yourself, without worry or stress. If you have specific goals in mind, there are a number of ways to make them happen. For example, if you want to travel, you might consider downsizing your home and using the extra money to fund your trips. Or, if you want to help your grandchildren with their education, you could set up a savings plan.
By taking the time to think about your retirement goals now, you can ensure that you’ll be able to enjoy a comfortable and fulfilling retirement later on.
What is a Retirement plan?
A retirement plan is there to give you peace of mind. It is a way to ensure that you will have enough money to live comfortably in your later years. So you know when you retire you’ll still be able to live the life you want. Retirement planning can be a daunting task, but it is important to start planning early.
There are many factors to consider when you start thinking about retirement. For example, you will need to think about how much money you will need to have saved up. You may also need to think about where you want to retire and what kind of lifestyle you want to have.
It’s never too early or too late to start planning for retirement. A retirement plan can help you achieve your investment goals and develop a financial strategy. We can help you attain the retirement you dream of. Whether you’re looking to retire early or want to retire in 30 years, we can assist you in making your dreams a reality.
Pre-Retirement Planning
A pre-retirement plan is a financial and/or lifestyle plan that you put in place before you retire. It may include things like saving money, paying off debt, investing in assets such as property or shares, and making lifestyle changes to help boost your retirement income.
There are many different ways to approach pre-retirement planning, and the best approach for you will depend on your individual circumstances. However, there are some key things that everyone should consider when putting together a pre-retirement plan.
First of all, you need to make sure that you have enough saved up to cover your costs in retirement. This includes things like your mortgage (if you still have one), utility bills, food and other essentials. It’s a good idea to have a buffer of extra money saved up as well, in case of unexpected costs or unforeseen circumstances.
Secondly, you need to think about how you’re going to generate income in retirement. This may include things like selling assets such as property or shares or drawing down on your superannuation.
It’s Never Too Early or Too Late To Start
Whether you’re 21 or 51 creating a retirement plan can drastically increase your chances of achieving your retirement goals. Starting to think about retirement early can have some great outcomes, as you have more time to save and invest. Most young adults aren’t in the financial situation to invest lots of money into their super, but even small amounts can make a big difference in the long run. Consistency is very important when it comes to building an investment strategy.
It’s never too late to start planning for your retirement. Even if you’re close to retirement age, creating a plan and making small changes can have a significant impact on your retirement income.
No matter what stage of life you’re in, it’s important to start thinking about your retirement. At Aurora Wealth, we can help guide you through the pre-retirement planning process.
