Planning for retirement is one of those things that can catch you by surprise. All of a sudden you realise that you need to plan your retirement yet haven’t done much about it over the course of your working life.
This moment in life brings about thoughts of whether or not you will have enough money in retirement, along with the desire to strategise some quick win ways to better save money and boost your retirement plan.
The good news is that it all comes down to practical thinking. With some persistent planning, you will be able to better increase your chances of saving money for retirement while easing the worry of affording your lifestyle.
Here are the top five retirement planning tips:
Seek retirement planning advice immediately
This is easily the most important tip for planning your retirement. Seek professional financial planning advice as soon as possible. This means actually seeing a financial advisor and getting them to work out a personal financial plan that takes into account your current situation and your future goals.
There is a reason you pay for financial planning advice
If you are like me, I always pondered why on earth I would pay someone else to make me a financial plan. I always assumed that they would just tell me to save money, contribute to super etc. However it is actually quite the opposite.
Financial planners are able to help you work within all legal limits and laws to maximise your savings, minimise your tax and work towards your goals. They might say ‘the best things in life are free’, though this really is not the case when it comes to financial planning advice.
Read how to choose a financial planner here.
Look at how much you spend now
Retirement planning comes down to one thing; will you have enough money come retirement? A great trick is to start an accurate budget spreadsheet of your current lifestyle. Look at how much you spend and on what. This will help you see how much you earn and the amount you spend to maintain your current lifestyle.
How long will your superannuation or cash last?
Now assuming you are only looking at your superannuation balance, how many years will that super fund be able to fund that lifestyle? (divide super balance by yearly spend rate) My guess is it won’t go that far which is why you need to start planning.
Diversify your plans to avoid having all of your eggs in one basket
All too often I hear from readers that they are worried about retirement because they have all their money in real estate, shares or some other form of popular investment. One of the keys to financial security and investments is diversification of assets.
When you talk with your financial planner, ask them for ways to ensure you are well protected when it comes to investing.
Reduce spending now to secure more money for future
If you are fortunate enough to be planning for retirement ahead of retiring – start now. Start by reducing how much money you spend (based on your budget) so that you can use that money to save or invest based on your financial planners strategy.
Remember that $1 isn’t simply a dollar. A dollar now could make a few more dollars in a good investment, so everything you can save now might be able to grow further. Things such as compound interest can really help your money grow.
Consider alternative retirement planning strategies
Sometimes it is just inevitable that there isn’t enough money to have a financially peaceful retirement. Why not consider ways to live out your retirement that will be beneficial to your finances? For instance, you could consider spending a few months of every year living in a cheaper country such as Thailand. The weather is nicer and the cost of living can be nearly half compared to Australia.
Discuss these kinds of ‘plan B’s with your financial planner as they might be able to boost the money you do have even further come retirement.