Everyone is told to start planning for retirement as soon as they start working. Unfortunately, the reality for many is that retirement is a long way off and they don’t have the money spare to invest. The emphasis is on creating a life for themselves.
However, all too soon you’ll find yourself looking at retirement as being just around the corner. That’s when you may start to panic about whether you’re ready for retirement and what you should be doing to make it manageable.
Fortunately, even if you only have five or ten years left before retirement, you still have time to build a decent nest egg that will allow you to enjoy your mature years. Check your state retirement age now and consider your options.
Then, follow these five steps and get your finances on track!
1. Speak To A Financial Planner
You need to contact a financial planner that specializes in retirement planning like pillarfinancial.net.au. They will go through your existing portfolio with you and examine what other assets you have, as well as what state help you may get in retirement.
This will give you a good picture of what you can expect as a monthly income when you retire. If you’re happy with this figure, allowing for inflation, then you’re doing well and can relax.
The reality is that you’ll probably want to try and increase this figure a little. Your retirement planner can help you consider the best ways to boost your retirement pot. This can be through reducing spending, taking on another job, or opting for a higher risk investment approach.
The point is to know where you currently are and how much of a deficit you need to fill if you want to retire at a certain age with the right level of income.
It’s important to consider your future expenses. These may be different from what you currently spend. For example, your medical insurance payments are likely to increase as you age but you may no longer worry about hitting the bar every weekend.
In order to get an accurate picture of your retirement situation, you don’t just need to consider what funds you have coming in. It’s important to know what your expenditure is likely to be. That will help to ensure you have enough coming in to cover your expenses and a little extra for emergencies.
You can envision your future expenses and talk to people already retired to see what they spend. Don’t forget, if you plan to play golf or take up some other activity this will cost you extra!
3. Handle Debt
One of the biggest issues people facing retirement have to deal with is debt. Being in debt and having to make regular loan payments means you’re going to struggle with having enough funds during retirement. It may even delay your ability to retire.
That’s why you should try to pay off as much, or if possible all, of your debt before you retire.
You’ll need to look at your current incomings and outgoings to see how much you can free up, then pay the smallest debt off first. This will be the most satisfying and help to inspire you to pay off more. You can then tackle the next smallest debt and so on until you’ve cleared them all.
This can mean a change to your existing lifestyle but when you consider that it can create years of worry-free retirement you’ll appreciate that it’s worth it.
4. Saving Opportunities
The key to having plenty of money in retirement is to save as much as possible. That means you, and your retirement planner, need to consider the opportunities available today for retirement saving.
The first step is to make sure you’re making the most of any tax-free retirement savings options and to ensure you’re getting any grants or aid you’re entitled to from the government or your employer.
You should also consider ways of increasing your current savings contribution. This means looking at where you can cut costs or considering taking on extra work.
One effective way to save is to continue living on your existing salary and put all pay rises between now and your retirement into your retirement plan. If you do this for ten years it can make a significant difference to your retirement fund and your quality of life in retirement.
You may also find that you’re able to take a second job and save all the funds you earn from it. This can also be an effective way of increasing your retirement pot. Just ùake sure you choose the right savings vessel.
5. Location, location, location!
Most people downsize as they retire. This helps to eliminate the mortgage payments, increase the retirement pot, and potentially places you in a better position to access facilities.
In short, it’s all about location, location, location!
But, why wait? You need to start thinking about your retirement home long before you actually retire. If your children have already left home and you don’t need the big house anymore, it may make financial sense to move sooner and put the money into your retirement pot.
This will give you the opportunity to settle into your retirement home and handle any jobs that need doing before you actually retire. The fact that you’ll still be working will help you to afford renovations, creating the perfect retirement spot without damaging your retirement funds.
It doesn’t matter if retirement is fifty years away, twenty years, or even within the next six months. Knowing your current situation and talking to a retirement planner will help you to get the retirement that you want, even if that does mean changing your current lifestyle or working an extra couple of years.
The key is to consider what you want your life to be like when you retire and start building toward it today, it’s never too early or too late.