No Retirement Plan

Do you know what you would like as a retirement income? If not, you are not alone.

On reaching retirement, with good planning it is likely you will no longer have home loan repayments, but you will have to factor in house repairs, holidays, and changing the car over every so often and of course everyday living expenses.

How much will this cost you?

It is a very important consideration, as without knowing what you will require you cannot even begin to plan.

Using superannuation early planning is even more important, for instance if you need to save large amounts then there may be 'Reasonable Benefit Limit' issues. Later you will need to choose the correct form of superannuation pension for your circumstances.

Planning for retirement is generally left until too late for most people, the general approach is to come to a financial planner after reaching age 50 and seeing what will be possible with the money that is available. Many come to a financial planner after a retrenchment when additional last minute saving is no longer possible. The individuals and couples with the most successful strategies for retirement generally start more than ten years in advance.

Failure to plan for retirement often seems to be as a result of a lack of understanding about superannuation. There seems to be difficulty believing that superannuation money is also “real” money. Most people would be thrilled if they received a cash amount equivalent to the value of their superannuation, but for some reason the very word “superannuation” causes an immediate loss of interest.

It is only at the point of retirement that most people realise that superannuation is the only significant financial asset they have (outside of the family home).

Each aspect of superannuation requires critical consideration: what is a realistic investment return? What should my superannuation be invested in? How much to contribute? Personal contributions or salary sacrifice? For instance many people salary sacrifice simply for the upfront tax benefits but don’t follow through to consider whether their total superannuation situation is well managed.

Example: John wanted to have $110,000 per annum in retirement, so he and his wife could travel overseas where they have family and friends. However, he now has only three years left to retirement and has been made redundant from his previous high paying role, and when we looked at his superannuation, it would leave him short of his annual income requirements by about $50,000 per annum.

He now has placed himself in the awkward situation of having to save heavily in a short period of time, compromising his lifestyle and also having to decide whether to take large risks to try and obtain high returns. If he does take this path of high risk so close to retirement, he may find that he may be in an even worse situation if his high risk investments do not pan out.

Alternatively he may have to retire on far less income than he had originally “planned” for. It now seems that he had wished for a retirement income of $110,000 per annum because he never had a solid plan in place to realise it.

Superannuation is a simple concept, you put money away now to benefit yourself in the future. A bit like a Christmas savings account, except that Christmas is now called Retirement and lasts for decades instead of a day. Superannuation is still the key for the majority of Australians to a financially successful retirement.

Start planning now to achieve the retirement you desire later.

Disclaimer:

No investment advice provided to you.
This web site is not designed for the purpose of providing personal financial or investment advice. Information provided does not take into account your particular investment objectives, financial situation or investment needs.

You should assess whether the information on this web site is appropriate to your particular investment objectives, financial situation and investment needs. You should do this before making an investment decision on the basis of the information on this web site. You can either make this assessment yourself or seek the assistance of any adviser.