Decades of hard work should mean you can spend your golden years exploring our beautiful country, making a sea change or playing golf every day. Unfortunately, the reality is that more than half of us believe we’ll run out of money after retiring. So how can you properly save for retirement in order to truly enjoy those golden years?
According to the latest RaboDirect National Savings and Debt Barometer, baby boomers expect to retire with $400,000 in superannuation half of what they believe is necessary to fund a financially secure retirement. But before you hang up your fishing rod in despair, take the following steps to ensure you can afford the life you deserve when you retire.
1. Do the maths
How much money do you actually need for retirement? In 2011, the Association of Superannuation Funds of Australia estimated that a couple looking to have a comfortable retirement needs $53,565 a year, while a modest retirement lifestyle will require $30,399.
For a basic understanding of the annual costs of your retirement, make a list of all the essentials you’ll need for a modest living. After you’ve finished that, create a wish list of your retirement treats and potential holiday destinations. You can then work out your required income using online calculators1.
Start eradicating your debt now in order to be better prepared for retirement. Speak to a financial planner about how best to manage your debt, with a long-term goal of being debt-free by the time you retire.
3.Save, save, save
4.How super is your super?
Speak to a professional about which fund best suits your life stage and financial needs. If you’re knowledgeable in the workings of super, you could consider switching to a self-managed super fund online in order to reap some remarkable benefits. Merging your super funds and tracking down any lost super through the ATO are also ways to increase your super earnings.
The type of investment assets you hold will affect the size of your nest egg. Do you have shares or property that you can turn into income later? What will you need to do to ensure this takes place? Receiving advice from a financial adviser about how to achieve the best investment mix could be just what you need to turn a modest retirement fund into a truly comfortable living.
By taking these steps today, you can be on your way to eradicating debt, creating a retirement savings plan, engaging with your super and getting on top of your investments. You’ll thank yourself when you retire and can confidently reach for your wish list and see all your retirement dreams come true.