Retirement is a significant milestone in your life. Decades of hard work have led you to this moment, so your finances must support you in living the best possible life. When you enter a new phase of life, a lot of can change, particularly your finances. This is especially emphasized in transition into retirement.
As you move towards your retirement, you cannot help but think about the debt you are yet to pay off and how it might bring challenges for the things you may still wish to do – the weekend gateways, family barbecues, probably supporting the kids.
Hence, it is imperative to understand how much you need for a comfortable retirement.
Have a SMART Debt Reduction Plan
Get Organized On A Budget
Start by comparing what you owe, earn and spend and analyze where you might be able to cut back. Look for options like debt consolidation and refinancing and check if any of them suits your current situation.
With many Aussies looking at retirement, things that give some thought are social life, recreation, health and living expenses. Hence, it is advisable to set up a workable budget. It will help you manage the things mentioned above.
Consider What Sort Of Retirement Funds Are Accessible
The money you use to support your retirement life will likely come from an array of sources, including:
Savings, Investments, Inheritance
You may be planning to use the money saved in a term deposit or savings account or use the income you are making from an investment property or shares to contribute to your retirement. An inheritance from your family’s estate may also support you in later years.
Super
Typically, you can start accessing super between the age of 55 and 60 years, based on when you were born. Knowing your super balance is a significant part of retirement planning.
Additionally, if you have more than one super account, it may be advantageous to roll your accounts into one. You will end up paying one set of fees. However, you may lose certain features. Analyze all the pros and cons before you consolidate.
Government’s Age Pension
Based on your assets, level of income and circumstances, you could be eligible for a part or full age pension from age 65 to 67 onwards, or you may not qualify for assistance at all. So, make sure you check this option before including it in your pre-retirement strategy.
Build The Right Investment Portfolio
Ensure you invest in the right blend of assets to build your wealth and achieve your investment goals for retirement. You may consider talking to an adviser about forming an investment strategy right for your specific circumstances.
We asked Rick Nieuwenhoven, Chief Executive Officer at the Nieuvision Group & Professionals Modbury opinion on, “How to ensure that you don’t have any more mortgage repayments to make at retirement?”
So, there are two parts to this question I would like to answer. The first one is PLAN. So, we have spoken before about the magic number and the program and everything about that. Still, we need to plan out how we will retire and factoring in our mortgage or mortgage reduction strategy into that because what is fundamentally important is the age that you want to retire at and how much you need income-wise at retirement because everyone is different.
The second part of this question is logic-based: our mortgage repayments are either 2%, 2.5%, or 3%, depending on our financial situation, equity, and employment. Now we need to ask ourselves.
Are we better off paying down our mortgage excessively fast?
Are we better off getting all of that excess money and putting it into alternate investments that will generate a higher return?
So, what am I talking about?
Investment properties,
· Superannuation,
· Share Portfolios.
All of those decisions can get you a higher return “potentially” than paying off your home loan. So, we may be better off not focussing on excessive home loan reduction and instead of doing something else with our money. And then when we are ready to retire, terminating those investments if we need to pay down our home loan.
Seek Financial Advice
The best way to ease the stress of home loan debt is to get help. You don’t have to navigate the complex decisions of superannuation, retirement, investing and mortgages alone. A qualified financial planner will help you identify your retirement goals and achieve them.
Let’s Connect Over No-Obligation Phone Chat
