Even if you’re decades away from retirement, there is no time like the present to learn how to build a solid financial foundation so you can build sufficient wealth and avoid the retirement gap. It’s about getting started on the right foot and making intelligent, strategic decisions.
The good news is that there are plenty of ways to boost your retirement savings. Let’s start by looking at some of the best ways to build wealth before retirement.
What Is a Retirement Gap?
The retirement gap is the difference between what you’ll need in income to keep your standard of living during retirement and what you can reasonably expect from your retirement income.
Retirement income can come from various sources, including:
- Government pension, e.g. Aged Pension or DVA Pension
- Superannuation income streams
- Personal savings and investments
How Can You Track Your Retirement Goals?
The best thing you can do is track your progress toward your retirement goals. This can help you identify how much money you need to retire comfortably, whether or not you’re on track with your current savings strategy and what adjustments you could need to make.
Calculating Your Retirement Gap
To track your retirement gap, you’ll need to know how much money you’ll need to live in retirement. Estimating how much income you’ll need each year is the best way to start.
Then the basic formula for this calculation is to subtract the amount you forecast will be needed for retirement from the total assets projected to accrue over time. This gives you your “retirement income gap”.
A financial adviser can help you determine your retirement income and how much it should be. It’s important to note that this is just a formula, not an exact science.
Develop an Investment Plan for Your Retirement
Creating an investment plan with your financial adviser is the next step in determining how much you will need to save for retirement. This plan will include strategies for managing your portfolio, including how much risk you want to take and when.
Saving for retirement includes purchasing investments that will increase in value and generate income over time. This means you need to take on some level of risk to achieve your goals. Consider investing in shares, infrastructure, property, or other types of securities as part of your retirement plan.
Not all investments are created equal, however. Some investments are riskier than others, and you should only invest in those appropriate for your portfolio. Your financial adviser can help determine which investments will work for your needs and goals.
Increase Your Superannuation Contributions
If you have yet to seriously manage your superannuation fund, it’s time to start. The earlier you contribute, the more time your money has to compound. This means that you will be able to retire with a more significant nest egg than if you wait until later in life.
Consider seeking advice before increasing your superannuation contributions if you want to retire sooner to ensure you choose the strategy that is optimal for your situation. The more money you put toward your retirement fund, the better off you will be when it comes time for you to leave the workforce. If you need to save more money each month, try increasing slightly and gradually increasing it over time.
Close Your Retirement Gap with Advice from Coastal Advice Port Macquarie
It’s always early enough to start building a solid financial foundation so you can avoid the retirement gap. You can set yourself up for success by making intelligent, strategic decisions today and being intentional about your financial goals.
Consult with a trusted financial adviser for the best retirement plans to help you make the best decisions for your retirement. Reach out to Coastal Advice Port Macquarie today and let us help you start building a solid financial foundation. Call us or book online to secure your complimentary consultation today.
Related Articles
Secure Your Today, Shape Your Tomorrow: Premium Financial Advice You Can Trust.
GENERAL ADVICE WARNING