Key considerations in retirement planning:
What are your lifestyle goals?
Date: December 29 2015
In our golden years, we want to be able to enjoy the lifestyle that we want. We work hard for many years in our life and we earn the right to enjoy life exactly the way we intended in our twilight years. For too many of our senior Australian citizens, they don’t get to enjoy that dream since they cannot afford to maintain their lifestyle. When you choose to retire, you are relinquishing your working income. The expenses will still be ongoing and you need to have a plan to manage life’s expenses, as well as any other costs for you to achieve your lifestyle dreams. To ensure your retirement is a successful one, the financial planning experts from VFPS have provided tips and advice on how to achieve it.
Know the lifestyle goals you want to have in your retirement.
You need to know exactly what you want to achieve in your retirement. Do you want to travel the world or buy your dream home? Do you see yourself gardening? Would you like to retire full time and rely purely on your retirement income? Based on the lifestyle goal you want to achieve, you can work out how much you will need to have saved in your retirement account.
According to Australian department of social services, the retirement age for both men and women will be increased to 67 years. The younger you are, the more opportunities you will have to build your financial retirement portfolio. Based on the estimated cost of living in Australia, retirees will need $30-40,000 in income each year. According to the Australian Institute of Health and Welfare, the estimated life expectancy of Australians is 82 years. This means you would need an income for at least 15 years ($450,000-600,000). If a person started saving consistently from the age of 17, this would see them saving approximately $12,000 each year. Most Australians don’t consider saving for retirement until their thirties or forties. At that time, they also have other commitments including raising their family, mortgage payments and more.
Set a plan to build your retirement income.
It is important that you have a plan to develop your retirement income. There are several products offered by banks and financial institutions that it makes it difficult for the average Australian to decide which options will give them the best bang for their buck! There is a risk vs. reward scenario when it comes to developing your retirement income. A few of the options you have include:
Saving your retirement income yourself.
You can open up a bank account or a do-it-yourself superfund to build your retirement funds yourself. Typically, you would receive a standard interest rate that will grow your funds. The higher the rate, the better! Additionally, it would be ideal if you can invest in an account that compounds your earnings over time!
Investing in a super fund.
You can invest your money into super funds where investment specialists will invest your money into different businesses, shares, property and asset ventures in order to grow your retirement income. There are different categories of risk that may see our money grow or dwindle. Compare the market and the institutions that invest your money to see what type of returns you can get for your investment.
Implementing a retirement growth strategy yourself.
If you achieve this successfully, you can grow your retirement fund exponentially! You can take the risk and invest in the different asset opportunities yourself and take 100% of the profits (something that doesn’t happen if you go through other institutions). This may see you investing in blue chip stocks, derivatives and property.
There are a few main ways you can achieve your financial independence for retirement. Either earn enough income through savings or building equity that will allow you pay yourself over your retirement years. Alternatively, you can develop a passive income through income earning assets such as stocks and shares that pay dividends, properties that pay rental income or businesses that pay business income.
You must take action now to build your retirement funds if you want to guarantee the quality of your life in your retirement years. Get in touch with an expert to see how retirement planning can set you up right in your golden years.