Setting up your finances for retirement

It is smart to plan ahead to ensure you are able to live in retirement in the manner to which you have become accustomed.

  4.5 minutes

Knowing you are in a position to fund the next phase of your life is of utmost importance when contemplating your retirement. Whether your post-working life lies years ahead or is just around the corner, it is of critical importance that you have a strategy in place to ensure you are managing your cash flow and assets in a smart way. Follow these tips for setting up your finances for retirement.

If you’re contemplating retirement in the foreseeable future you need to consider carefully whether you have accumulated enough capital. Begin by undertaking a financial stocktake ensuring you take into account any funds in your savings account or term deposits and the value of other assets. Include both existing and future liabilities.

Consider carefully the age you want to retire

Many people choose to retire when they become eligible for the age pension which is currently 65, but rising to 65½ in July 2017 and then in stages to 67 in July 2023.

If you are not relying on your superannuation savings to finance your retirement, then you can retire at any age, assuming you have the financial resources to support yourself.

When deciding when you wish to become a lady or lad of leisure, it is important to consider the age when you can access your super benefits as well as the age pension. You should also take into consideration how long you expect to live, and how much income you will need each year.

Make a long-term financial plan

Next, prepare a budget of all your cash inflows and outflows. As well as allowing you to identify and control your spending habits, a budget also means you can plan ahead with some confidence.

Perhaps you will save money by downsizing your home in your retirement years. However, you may also need to fund unexpected costs such as property renovations. Either way you should aim to make an honest assessment about how your needs might change over time.

Ensuring you have adequate insurance cover to protect your assets is also a good idea at this stage.

Identify ways to grow your retirement income

If your long-term budget suggests your cash outflow exceeds your inflow, then it may be time to make some hasty adjustments or investigate alternative avenues to supplement your future cash-flow needs.

Speak with your accountant or financial adviser who will be able to guide you in the right direction when considering diversifying your investments e.g. shares or property.

You could also consider making additional before-tax contributions to your super. This is particularly handy if you want to offset a large capital gains tax bill. Your accountant or financial adviser can give you more details.

Seek help from the professionals

In addition to reviewing your current financial position and offering advice in terms of investment opportunities, a qualified financial planner can also advise you on whether you qualify for any government benefits to supplement your pension and what you need to do to get them.

There are also ways in which your bank can assist you to manage your finances ahead of retirement. Product options include term deposits where customers are able to select their own maturity date to suit their specific requirements, high-interest transactional accounts and layering deposit options.

Want to learn more about your different options for managing money? Click on the link to see our range of transaction accounts. Ready to take the next step? Contact us to find out how we can tailor a finance solution for you, or call us on 1300 131 141.