Have You Taken the Time to Plan?

By: Christine Addis

What is it about retirement that we feel we have all the time in the world to think about it but go into a mad panic when we reach our 50th birthday and feel like we are destined to live a less than desirable life on the pension?

I see so many people between the ages of 50 and 60 who are panicking about retirement and feel that they need to work until they are 70 because there is no way they think they can afford to retire. It is true that turning 50 can hit some of us hard. We can wonder where the time went and can get lost in a sea of depression instead of using that very normal prompting to get started on our preparation.

In an ideal world, the day you start earning your first income, should be the day you start putting away money for your savings goals. Goals that include the financial position you wish to be in by the time you get to your 50’s and 60’s. However as we all know we do not live in an ideal world and our first pay often is spent frivolously without a thought of tomorrow and the responsibilities we will be heading for.

So let’s start from the base point of 50 years old. The average balance in a superfund in Australia,  if you are male, is $172K. Unfortunately for women it is often half that. Women often will have less in super because of the time they took out of the workforce to care for children and also they are the most likely to spend time caring for aging parents. Part time hours coupled with a gender pay gap can have a negative effect on a woman’s superfund. However, this is not the forum to argue the case of women’s pay nor to argue the case for husbands to contribute to their wives’ super whilst she is away from the workforce caring for their children but what we are discussing here is what you can do in the next 15 years from the present position you find yourself in.

First of all make sure you are on track to have no mortgage by the time you retire. If you have been paying interest only, consolidating multiple debts within your home loan or redrawing from your mortgage, it is time to get serious about injecting some funds onto the principal of your debt and get yourself back on track.

Secondly, get to know what it costs you to live. If you have a budget and you regularly record what you are spending, this will be easy because you will be able to see what expenses you have to afford now that will no longer be around when you retire (e.g. school fees, children’s dance lessons and sporting activities etc.) If you do not have a budget – you really do need to get one – fill in your contact details here and we will send you a basic template https://www.coachchris.com.au/contact/

Thirdly, have a chat to a representative from your superfund  or make an appointment with a financial planner to find out about the possibility of paying extra into your super so that you can increase your savings within that environment. They can talk to you about salary sacrifice and tax savings etc. Remember your super is your super! So become actively involved in understanding it and how it works.

Lastly and maybe most importantly, spend some time thinking about what you need in retirement. See where you are now and then work out what you need to do now so that you can get to where you want to go by the time retirement comes around. Think about what you want to be doing in retirement – a person who wants to travel the world will need more money in retirement than person who wants to potter about in their garden. And one thing that often surprises people is that you do not have to draw every bit of your super out once you hit 65. Your financial planner can help you to understand how you can take a pension from it and still invest the remainder so that you money is still working for you in retirement.

So I hope I have given you food for thought – but whatever you do – start preparing for your future, today!

Article supplied with thanks to Coach Chris

About the Author: Chris is a financial coach with a vision for helping people get “their money into great shape” no matter what their income.