Financial planning for retirement: how to make your money last

Retirement is inevitable, but a fulfilling retirement takes planning. Embrace your golden years by mastering financial planning for retirement and designing the lifestyle you’ve always dreamed of. Start your journey to a successful retirement today, no matter what your aspirations may be.

Why financial planning for retirement is essential

Financial planning for retirement will give you the power to make choices about your post-work lifestyle and secure those choices. Some choices, like how much you invest in your superannuation and what super fund you go with, need a lengthy period of time for the exponential returns to make their full benefits manifest. That’s why the earlier you plan the better. Without a plan, choices will be made for you that may leave you in financial distress and struggling to get by.

According to the Australian Bureau of Statistics a large percentage of people did not retire at a time of their choice but through necessity. The reasons for this were because of poor health (21%), difficulty finding work (11%) or needing to care for someone (8% for women and 2% for men). That means planning early is important to make you ready for the unexpected.

How much money will you need when you retire?

Kickstart your financial planning for retirement by first pinpointing your financial needs. Strive for a retirement nest egg that allows you to enjoy your desired lifestyle without draining your assets. Aim for a sustainable income that covers living expenses and unexpected costs.

A common rule of thumb is to target 80% of your pre-retirement income, providing a comfortable, familiar lifestyle. However, if you dream of luxury, aim higher, or if a simpler life appeals to you, a lower percentage might suffice.

Income streams for retirees

Retirement might put an end to your regular work income, but there’s still a world of possibilities to keep the cash flowing. Smart financial planning for retirement involves crafting a strategy that ensures a steady, sustainable income stream for years to come, without depleting your resources.

Age pension

In the land down under, Aussies can start enjoying their pension between the ages of 65-67, based on their birth year. But keep in mind, it’s not a guaranteed perk – you’ll need to meet certain asset and income criteria. While the pension can support a modest retirement, most folks crave a little extra financial cushion or the freedom to forgo the pension altogether.

Superannuation

As you’ve hustled away in Australia, you’ve been steadily building up a Super account designed to cushion your golden years. To boost this nest egg, consider bumping up your contributions or opting for high-performing super funds.

Once you hit your preservation age (55-60, based on your birth year), it’s time to strategise how to make the most of your super. The key is to ensure a sustainable income for the remainder of your life, so you can enjoy every sunset without a worry.

Investments and savings

There are a myriad of ways that you can invest your money and have it generate a steady stream of income without you having to work. Real estate, retirement savings, bonds, shares and ownership of a business can all contribute to your income.

Other forms of income

Retirees often choose to work part-time or in a money-making hobby either because they enjoy it or because the money makes a difference to their retirement lifestyle. Talk with your financial adviser for more ideas.

Financial planning for retirement tips

• Embrace calculated risks: When retirement is still a distant dream, opt for high-growth investments, even if they come with higher risks. As retirement nears, shift gears towards steady and reliable income sources by focusing on low-risk strategies.
• Diversify for security: Aim for a diversified, low-risk investment portfolio in retirement. This safety net ensures that even if one investment falters, others will keep you afloat.
• Insure your peace of mind: Don’t let unexpected events weigh you down in retirement. Budget for insurance, covering essentials like health, home and contents, and car insurance.
• Use a financial advisor/planner: financial planning for retirement is something that we all need to do well. That’s because we don’t just want to survive our retirement but to enjoy it and thrive. Financial advice for retirement planning can help you at whatever age or stage you are to make good goals for retirement and find the best path to get there. Financial planners can help you navigate through the bewildering complexities of all the options, rules and strategies.

Plan your retirement with GSK Financial Services

GSK Insurance Brokers is a Perth-based financial planning practice with over 40 years of history in helping people and businesses prosper and reach their financial goals. Contact us today for a financial planner in Perth. We’d love to help you with any and all aspects of financial planning for retirement.