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Is it OK to start your retirement planning in a few years?
Maybe. However, unequivocally, starting today is always better.
At Rising Tide, 85% of our fee-paying clients are under the age of 55 because, the younger you start preparing, the more likely you are to reach your retirement goals.
When it comes to retirement planning, we specialise in helping you articulate and understand what your ideal retirement looks like, and we often do this many years in advance. Generally, people wish for a relaxed retirement where they have the time and funds available to explore new hobbies and enjoy the fruits of their earlier labour.
To achieve this type of future requires more than wishful thinking, though; it demands thoughtful financial planning.
So, what are some essential considerations to remember as you embark on your retirement journey?
Check out our list below, which uses the Australian Financial Security Authority (AFSA) guidelines on what you might spend in retirement, based on your choices.
1. Start early for long-term benefits
One of the most crucial aspects of retirement planning is starting early.
The AFSA’s Retirement Income Guide emphasises the importance of beginning to save for retirement as soon as possible. The magic of compound interest means the earlier you begin contributing to your retirement fund, the more time your money has to grow.
Even small, consistent contributions can yield significant results over the years.
2. Set clear retirement goals
Understanding what you want your retirement to look like is integral to effective planning.
So, what lifestyle do you envision during your golden years? Do you plan to travel, downsize your home, or indulge in a favourite hobby?
Each of these goals carries a financial implication and, by defining your aspirations, you can work with a financial planner to estimate the funds needed to achieve them.
3. Assess your current financial situation
Before crafting a retirement plan, it’s vital to assess your current financial standing.
This involves analysing your assets, liabilities, income, and expenses. We can help you gain a comprehensive view of your financial health and provide insights into how to bridge any potential gaps between your current situation and your retirement goals.
4. Choosing the right assets & investment environments
Diversification is a key strategy for managing risk in your retirement investments.
You need to consider what role your superannuation, investments and your home might play in your retirement income. Investing is essential for a self-funded in retirement, but it looks different for everyone.
5. Understand superannuation
Superannuation is a fundamental pillar of retirement planning for Australians, so it’s crucial to comprehend how it works, the various investment options available, and the potential tax implications.
You can maximise the benefits of your superannuation contributions by staying informed and making choices aligned with your retirement objectives.
6. Regularly review & adjust your plan
Life is dynamic, and so are financial markets and regulations.
That’s why regularly reviewing your retirement plan – to ensure it remains aligned with your goals and current economic conditions – is a must. As you move closer to retirement, adjustments may be necessary to accommodate any changes in your circumstances.
In a nutshell
Planning for retirement is a journey, one that demands careful consideration and expert guidance.
Adhering to the essential principles outlined above, and consulting with a qualified financial planner, can lay the critical foundation for a comfortable and secure retirement.
The AFSA’s Retirement Income Guide serves as an invaluable resource to deepen your understanding of the intricacies involved in retirement planning, and so is a great starting point for building knowledge.
The key takeaway message?
Start your planning journey early, set clear goals, and empower yourself with accurate information to ensure your retirement years are golden.