Heading into retirement can seem like a daunting prospect. Your investments can go through periods of global uncertainty, however a well-planned strategy should see you make it through those times in good shape.
Supporting yourself in retirement while maintaining the lifestyle you’ve been dreaming of may not seem like an easy task.
So with this in mind, how do you know when you’re ready, and what can you do to ensure a smooth transition?
Here are the top five things to ask yourself when you’re considering retiring:
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How much will I need?
How much net income do you expect to need in order to support yourself when you can no longer work? The emphasis on net income is important – make sure you take into account how much you’ll need for taxation and other costs. Taking the time to break down these costs should give you an indication of how much you’ll need to fund the future you desire. -
What is my expected time in retirement?
While none of us can accurately predict how long we’ll be around for after retirement, it’s helpful to have an approximate idea of how many years you may need to support yourself for. Take into consideration that the average person will live for around 20 years after they retire - that means stretching your retirement savings out over 20 years. -
What difference will it make if I retire at 55, 60 or 65?
If you retire at 55, that’s 10 more years to support yourself for and 10 less years of earning money. Similarly, if you retire at 60, that’s five more years to support yourself for and five less years of earning money. To some, this may not be a big deal, but to others, it could have a huge impact on their retirement lifestyle. This is where a financial adviser will come in extremely handy, as they can give you different scenarios based on retirement at different ages. -
Should I work part time?
Part time work in retirement could make a huge difference to the amount of retirement income you require. For some people, especially those who are just entering retirement, this can seem like a great idea – it helps you ease into the retirement routine while providing you with a bit of extra pocket money. However, before considering this, it’s a good idea to get financial advice about how it could affect your retirement funds and tax liabilities. It may not be worth it in the end – and again, it’s something that depends on your individual circumstances. -
Will I need lump sums?
Do you have any big-ticket items waiting for you as you enter retirement? Paying off the credit card? Taking that overseas holiday? Buying a new car? If so, a lump sum payment could get you where you want to go. However, a lump sum payment should not be an act of impulse, it’s something that should be built into your retirement plan to ensure you are left with adequate income to fund the rest of your retirement.
If you’re starting to ask yourself these types of questions, it’s a good idea to seek expert advice so you can start building a plan that works for you. When it comes to planning your retirement, it’s never too early to start; because the earlier you start, the easier it is.
IMPORTANT INFORMATION
This document has been prepared by Rowland Financial Advisory Pty Ltd ABN 66 163 488 480 who is an Authorised Representative of Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138. Information in this document is based on regulatory requirements and laws, as at 1 July 2014, which may be subject to change. This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. Taxation considerations are general and based on present taxation laws, rulings and their interpretation and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.