Leaving full-time employment is a great opportunity to enter a new and very rewarding life stage. It is a time to take stock of your current situation, clarify goals, identify opportunities and tailor your financial situation to support these. Creating a plan for your transition into retirement is about strategically investing your accumulated savings and superannuation in order to replace your wage with regular income throughout retirement.
Being financially secure in retirement is incredibly important to your quality of life once you have stopped working. A sense of choice and independence in retirement are essential for a happy and fulfilling later life and creating a secure financial position is integral to providing you with these. Planning your transition to retirement means you can control your path and create a satisfying work-life balance while ensuring your money is being managed in the most efficient way. Financial Planning is an integral part of this process and Capital Focused is dedicated to work with you every step of the way.
There is no need, however, to wait to develop your retirement capital. In fact, the most common piece of advice is to seek advice early. Capital Focused can provide comprehensive financial advice throughout your lifetime so contact us today to see how we can help you.
A few things to consider regarding retirement:
A key piece of information in your retirement plan is an estimate on your expected remaining years of life. Whilst most people find this unpleasant or uncomfortable to think about, planning in this way means that you can live your life to the fullest by decreasing your ‘longevity risk’ (the risk of outliving your retirement savings). This estimate provides a ballpark figure regarding the number of years your alternative income must be capable of supporting your lifestyle. This will inform the amount you need to retire and give you an idea of a suitable time to enter retirement.
In Australia there is no fixed retirement age, however you can currently access superannuation benefits tax-free from age 60. Retirement age, ideally, is chosen by you according to your ability to financially support yourself and is dependent on the costs associated with your desired lifestyle after stopping work.
Your planned expenses after retirement will depend on your intentions, goals and lifestyle choices. It is common for people to plan for a larger post-retirement income initially, when they may pursue travel or hobby related activities which were not possible when working full-time. As people who have retired continue to age, their expenses may vary in line with their changing lifestyle. It is helpful to plan for your desired retirement in order to ensure you have adequate funds.
There are always uncertainties that even the best plans can’t predict. Thus, it is recommended to maintain flexibility in your retirement investments and account for unforeseen expenses which are likely to occur. Insurance can also be an effective solution to catering to these events. A prolific observation in the medical field is that average health costs increase steeply with age. Other events which may increase your required income during retirement include changes to tax laws, market crises or unexpected life events. By allocating funds in case of these events, you are even closer to securing your financial security in retirement.
The single most effective tool to ensuring a comfortable retirement is planning. By being aware, you can be prepared. Capital Focused can assist you in creating a retirement plan by maximising opportunity and entitlements. Every cent counts in retirement so give us a call today to discuss your options.
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial planner and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.