There will be some who have a self-managed super fund (SMSF) or are thinking of starting one. Ideally, it could be part-time work that will add meaning to your life, as well as boosting your superannuation, or it could be voluntary work, or even working on a hobby. It is highly recommended that you do some sort of work after you retire. The financial side is important, and obviously the longer you can defer your retirement the more your superannuation should grow – and the longer it will last. That’s an increase of 60 per cent in superannuation just by working another five years. If their fund earns 8 per cent per annum, the balance would be $800,000 in another five years. Think about a person aged 60, earning $100,000 a year, with $500,000 in super. Remember, every time your portfolio doubles in size, there is more growth in the final double than in the sum of all the other doubles combined. Because of the way the mathematics work, the largest increase in any long-term compounding investment, including your superannuation fund, comes at the end of the period. Pension age – the age that you can access the Age Pension – is increasing to 67 for people born after 1 January 1957, so anybody who wants to retire before their pensionable age needs to ensure they have enough capital to live on until they are eligible for a pension. Then there’s the question of whether you intend to apply for Centrelink benefits. For some people it’s a joy for others, it’s hell on earth. If you think you’d like to downsize from your lovely big home to an apartment, rent an apartment for three months. A major change to your abode means all those relationships may be lost. If you think that retiring to a coastal town would be perfect for you, rent in that location for at least six months.Ī major part of retirement happiness is social network, which normally comes from your job, family, sport and other associations such as church. If you’re thinking of becoming a grey nomad and spending years travelling around Australia, hire a caravan and take a two-month trip to see if you like it. If you intend to make major changes, I suggest a ‘try before you buy’ approach. And the life expectancy calculator at is great for forecasting how long you might live and what factors influence your longevity. My retirement drawdown calculator is a great tool. For example, if you’re going to have just one car, that’s a further reduction in costs.Ī major issue for most is how long the money will last. Major questions are where you will live, how you will occupy your time, what exercise and sport you will take up and where you will invest your money.Ī great first step is to do a retirement budget, which is not difficult if you use your present expenses as a guide, subtracting items that are purely work-related. Well before your retirement date, sit down with your partner if you have one, and think about how your life will be when you do retire. Ideally, retirement should not be something that is thrust upon you, but something you move into gradually. There is a wealth of research telling us that those who prepare and plan for retirement tend to have a much happier, healthier retirement than those who suddenly find themselves out of work with no plans. Also, it helps if your health is in good shape. It’s been said that having a fulfilling retirement requires “something to do, someone to love, and something to look forward to”. If they go down the wrong track, or don’t take advice, the consequences can be horrendous. But the problem is that most people don’t know what they don’t know. This is a time when the regular salary is no more, and any mistakes can be extremely costly. It’s one of the biggest transitions in life. Unless you’ve planned the future well, there will be no more structure, no more goals and the only source of income will be your superannuation and savings. Suddenly, retirement arrives and you’re master of your own destiny. At this stage, you may form a relationship, buy a home, have children and undertake the long journey of making a life for yourself, while educating the children and paying off the house. Think about most people’s lives – cared for by parents in the early years, before being subject to the discipline and structure of school and then higher education before forging a career. That’s fine in theory, but the reality can be quite different. Retirement is often touted as a paradise on earth with no work deadlines to meet, no meetings and the freedom to do what you like, whenever you wish.
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