When you’re preparing for retirement , it’s crucial not to overlook financial planning. It’s one of the most important things you can do to secure your future. You might be tempted to put off thinking about retirement but starting early will relieve any stress and help you formulate a plan that’s easy to implement and follow. Want to start planning for retirement but not sure where to begin? Read on for our helpful guide to make forecasting your future straightforward and simple.
Understand what you need
When you begin planning for retirement, take the time to consider your financial position and the goals you’d like to achieve before you retire. Formulating a retirement plan as part of your overall financial plan is a great step. Before you start drafting a plan, ask yourself these questions:
- What will it cost me to live the life I want?
- How can I cut down on costs or improve my financial position?
- What’s my capacity for risk?
- What do I prefer in terms of cash liquidity – do I want to access cash or am I interested in investments?
- When would I like to retire?
- What sort of lifestyle do I want after I retire?
Plan a super strategy
Most Australians don’t really understand the details of superannuation and don’t give it as much consideration as they should. There are some great strategies you can implement to make sure you’re taking the best possible advantage of your super For example, when you voluntarily contribute to super, you’ll receive tax benefits, especially if you earn a higher wage. Voluntary investments lower your tax obligations right now while also improving your income once you reach retirement.
Develop a retirement picture
Super’s just one of the aspects of a retirement plan. Life after you finish work will also involve:
- The Age Pension: The pension is adjusted every year, and for most people, it’s not really enough to live comfortably. It could even be reduced if you have investments or still receive income.
- Safety net: If something unexpected arises after you retire, a financial safety net can help you take on whatever comes your way with the assurance you’ll stay on target to live the life you want.
- Investing: Investments, such as shares or property, can continue to provide income after you finish working. Each kind of investment carries particular benefits and drawbacks.
Create good debt
Debt can be made up of mortgages, investment debt, personal debt, student loans, and credit card debt. But it’s not all bad. Good debt is that which is incurred within a strategy to boost wealth. Think about when you take on a mortgage when investing in a property or buying your own home. Good debt can become bad debt when it’s not managed well and ends up costing you more than you receive in returns. Bad debt is usually incurred if you spend more than you earn and will reduce the amount of money you’ll have to use and enjoy once you retire.
Turning bad debt into good debt can be done through a process known as debt recycling. This involves you making use of any equity in an asset you might owe bad debt on to purchase an income-generating investment. You can then use the generated income to pay off your debts.
Implement your plan
No plan is perfect. And while it’s important to plan, there does come a time when you need to put your plan into action. Combining these steps with professional advice can help you implement the best strategies for a solid retirement picture. That’s where the team at Ironbark Wealth Advisers comes in. We offer individualised financial planning services to help all our Dubbo and Orange clients improve and maintain their financial position. Call us today on (02) 6884 4680.
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