For many workers, retirement sneaks up quicker than they think it will — and without the proper investments and planning, those retirement years can be not so golden. The earlier you start preparing for your retirement, the better your chances of enjoying it comfortably and securely, with all the money you need for travel, leisure, expenses and hobbies. Get on top of your current finances — and your future retirement — by finding out answers to the following important questions:
How much money do you have now, and what you will you have in the future? What assets do you have between your house, savings and investments? What are they worth now, and how much wealth can you accumulate going forward? Will you be eligible for the age pension, and when can you apply for it? By having a clear idea of where your finances stand, you can then take steps either to correct your course or stay on track with your current plan.
What kind of long-term financial plan will you need? How will your needs change over time? For instance, in the first few years of retirement, you might want to travel, take up a new hobby, or make a major purchase such as a boat or a recreational vehicle. Later, you might want to replace your car or renovate your kitchen, and perhaps move into a retirement community one day.
Think about how you can use your different income sources to fund the different stages of your retirement. You will need to plan for the long term, not just the first five years of retirement, factoring in not only the fun activities, but also the unexpected expenses such as medical bills. Seek out financial advice from a professional if you are unsure what to do.
How can you grow your retirement income? If, through your examination of your financial situation, you discover that you will need more income in retirement, don’t panic. There are ways to stretch your retirement income and things you can do now to stretch out every dollar:
- Get advice as early as possible. Managing your finances can be hard work, even if you have some financial knowledge. Ask for financial advice early on for help with investment strategies, the level of risk involved and the potential returns you can expect.
- Diversify your investments. With many retirees living to 90 and beyond, it’s a good idea to invest at least some of your money in assets that will grow over time, like shares and property. Diversifying will help to ensure your capital will grow in value and keep pace with inflation as well as your income needs. Simply put, spread out your investments now, and avoid financial heartache in the future.
- Manage your spending. This is one of the simplest ways to make your money last longer. Use budget planners to help you save for special items and keep your expenses in check.
- Take advantage of your entitlements. Even if you don’t get the age pension, you may be eligible for other benefits, such as travel concessions, cheaper medicines and reduced water rates. The Seniors Card also will give you discounts on travel and certain retail services.
- Keep on working. By continuing to work, you can leave your savings untouched for longer while adding to your super. The government has incentives to encourage people to work past the pension age. You also can transition into retirement by cutting back on your hours, or start a business that lets you follow your lifelong passions while taking advantage of the tax benefits of owning a small business.
When it comes to managing your retirement savings, it’s wise to get financial advice so you can be sure you are maximizing your income at every life stage. Even if your retirement is far off, you can get there safely and comfortably by planning ahead and staying in control of your finances.
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Felicia Gopaul is the creator of FelciaGopaul.com, a financial and retirement planning website that makes financial advice easily accessible for consumers. Her articles, tips and advice help readers to manage their money, plan for retirement and pursue their dreams. Aside from writing, Felicia loves to travel and explore new destinations with her husband and daughters.