Unfortunately, your realistic target date for retirement is probably a lot further away than that dream date floating about in your head. To help plan your future retirement, here are some questions to ask yourself in advance.
What will your lifestyle be like when you retire?
Do you intend on trying to maintain your existing standard of living? Most people anticipate a 70–80% income replacement goal. Will you still be paying your mortgage off and will you need money set aside for your health?
According to the most recent findings by the Association of Superannuation Funds of Australia, a couple needs a lump sum amount of $640,000 to retire comfortably, whereas a single person needs $545,000.
How much should I be saving now?
You should probably be saving more than you think. As a general rule of thumb, stash away 10 to 20% of your income for your retirement while you are working.
I would advise anyone to top up their workplace superannuation. It can be hard saving when you have other commitments such as a funding a child through university, but it’s good to be strict and work to a target.
We’re living longer especially in developed countries. Statistics reveal that an average couple retiring at 65 has a greater than a 50% chance that one half of the couple will live beyond 90.
What should I be doing ahead of retirement?
The last seven years of your super fund should have maximum growth to prepare you in retirement. Your super is one of the most tax-effective ways to save. Think about salary sacrificing as this will give you tax benefits. You will only pay 15% tax on contributions up to $25,000 a year.
Don’t forget that you can use some of your before-tax pay to bolster your super. You just have to ask your employer to redirect some of it into your super account.
If you have had more than one super fund throughout your working lifetime, make sure you transfer all your balances into one superannuation account. This cuts down on administration and will save on fees.
The sad reality is that most people will spend more time planning their annual holiday than how they will fund their retirement. If you need some assistance with retirement planning, then make an appointment with myself at TV Financial Services. It will be less daunting if you have someone to guide you.