Retirement can seem a long way off, however there are many reasons why planning now can put you in the driver's seat later.
Retirement may last longer than you think
Have you thought about how long your retirement could last?
The bottom line is that in order to make sure that your money doesn't run out before you do, you need to plan to be retired for at least 20 years.
This means you need to start thinking seriously about how you are going to provide for retirement and consider seeking financial advice now, rather than later.
Do I have enough super? - that depends on how much money you think you will need in retirement. Here is an example. (This example assumes that your retirement income has to keep pace with inflation of 2.5% pa, and that the investment delivers a return of 6% pa.)
Example: Assume that you have accumulated, or will accumulate, $200,000 in super. On retirement, you convert your super into an income stream which pays regular income each year. Based on the assumptions we have made, this sum of money could deliver $17,183 per annum for 15 years, or $13,902 for 20 years or $11,969 for 25 years.
Will this be enough? For most people, probably not. A more realistic superannuation target is $500,000. This could potentially deliver $34,755 pa for 20 years, or $29,923 pa for 25 years.
Don't put off making sure you have enough super for the retirement you want.
Tax - tax is a very important element, sometimes cashing out all your super could mean you pay more tax than if you converted your super into an income stream. If you plan to sell a property to fund your retirement you need to consider the capital gains tax implications.
A financial adviser may be able to help, though access to financial modelling software which can map out various options for you.
Pre-retirement checklist
Although retirement is a long way off for most people, it could represent as much as 25% of your life.
Think about what you might want to do in retirement. Put in place a retirement strategy that is right for you, and seek financial advice before taking any action.
Here is a 'pre-retirement checklist' to help you get ready for retirement. If you have the answers to these questions and a plan to make it happen, you are on your way.
- When would you like to retire?
- How many years of retirement do you need to provide for?
- What are your objectives in retirement?
- How much income will you need to deliver the lifestyle you want?
- How much super will you need to have accumulated to deliver the retirement income you desire?
At Apex Partners we welcome the opportunity to talk to you about ways we can assist you and your finanical situation. Call us on 1300 856 338 to arrange a free, no obligation appointment.