Superannuation is essential to retirement planning in Australia. It is a mandatory, long-term saving and…
Are looking to retire in 5 years?
Five years before retirement, a person will make more crucial decisions about how to spend their retirement than at any other time. Why? Because these choices are difficult to change and they will have a lasting impact on income and spending for the rest of their lives. Making the right decisions can mean a longer retirement with more money – which is the goal.
According to the Australian Bureau of Statistics, 55% of people over 55 were retired in 2020.
To be ready for retirement with peace of mind and free of financial stress, here are four essential decisions need to make if you are looking to retire in 5 years:
1. Calculate How Much You Need to Retire Early
This calculation is one that people should be doing every year, but there is no better time to do this than now because people should have a better sense of their retirement income, debts, and other financial needs. The calculation will indicate where adjustments need to be, such as cutting spending or increasing income.
To calculate how much you’ll need to retire in 5 years, begin by estimating your spending in retirement. Make a list of all current expenses and any future costs you anticipate.
Then, consider your sources of income in retirement. Money from pensions, part-time work, and other sources will be used to cover your expenses, with any leftover amount coming from your savings and investments.
This Money Smart Retirement Planner will help you to get started.
2. List Your Asset Allocation
It’s also important to take inventory of your retirement assets and ensure you are invested in the best way to meet your retirement goals.
If you invest in assets that are too volatile, you put yourself at risk of losing valuable capital so close to retirement. Alternatively, invest in assets that are not risky enough and you may fail to generate a sufficient return to sustain yourself in retirement.
It is best to work with a qualified financial adviser to create a well-researched strategy that considers your tax implications, risk tolerance, diversification and goals.
3. Predict Your Retirement Outcome
You should make your money last longer than you live. Talk to a financial adviser about your retirement plans, including how much money you’ll need each year and which assets to use first. This will help you understand your retirement income, how your expenses will be covered, and how your investment returns will contribute to your long-term success.
Another benefit is that you can see how likely your projections will be achieved by comparing them to past results. A high probability of success will make it much easier to take the first step into retirement!
4. Explore Your Super Contributions
Making the right financial decisions in the years leading up to retirement can result in a retirement lifestyle that is much more comfortable and worry-free. This can be achieved by exploring your super contributions and making informed decisions about where to invest your money. Doing so can easily add thousands of dollars to your retirement nest egg, making your retirement even more comfortable.
In these final five years of your career, you have the power to make decisions that will affect your retirement and income for the rest of your life. The decisions you make now will make it easier to enjoy the retirement you envision – one with more money, more time, and the most freedom you can have.
Coastal Advice Group provides award-winning advice solutions in Newcastle, the Central Coast, Sydney, Port Macquarie, and Byron Bay. Our team of specialist retirement financial advisers take the time to tailor our advice to our clients’ individual lives and goals. We are passionate about delivering the best possible outcome based on your needs. If you need retirement financial planning services, call us or book online to secure your complimentary first meeting.
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.