Money Management: The Importance of Financial Preparation for Retirement
Retiring from the paid workforce is a major, life changing event. But many Australians put off the planning process, assuming that everything will work out. Many people feel that with compulsory superannuation contributions, and government subsidies they won’t have to worry about income during retirement. It’s fair to say that most people don’t intend to work until the day they die and with this in mind, financial preparation for retirement is a must do.
The Importance of Planning Your Finances for Retirement
Retirement planning is important because it is the determining factor of the lifestyle you’ll have in retirement. With a little financial planning, you’ll identify where your retirement income will come from, your sources of income and what your expenses will be. Therefore you’ll be able to structure a budget for this phase of your life.
If you do not prepare yourself financially, the prospect of retirement can be depressing. Many people put money/ savings away for retirement with little to no idea of how much they’ll actually need to maintain a certain standard of living. Have you started this type of retirement planning? That’s great if you’ve done so, but ask yourself if you’re actually putting enough money away.
Identifying What’s Important To You
Part of retirement planning is identifying what’s important to you. Some people look forward to living in a retirement village, visiting with family and taking short vacations to the mountains or the beach. Others yearn for travel and adventure. And some people will simply hope to get by.
Whatever you define as important during retirement, write it down and set yourself some goals in order to achieve it.
Checklist of Items to Consider
To make sure that you are retirement ready, it’s important to set goals and make a plan. It’s never too early or late to start. Some considerations include the following:
- At what age do you want to retire?
- Decide what your main income source is going to be.
- Work out how much superannuation will you need to retire.
- do your homework and see if you’ll be eligible for an aged pension?
- Financially, how money will you need to maintain a certain standard of living?
How to Fund Your Retirement
How to manage your money in retirement is one of the biggest considerations. Let’s face the facts. The age that you can retire, and financial independence go hand in hand. Looking at investment growth, as well as having a passive income source are important factors to grow your wealth. Furthermore, a financial adviser can help you to grow your wealth, to have as much money as you need during the retirement years.
Putting steps into place to have the right amount of money to enjoy and maintain your lifestyle during retirement is crucial. Remaining in the workforce for longer is one way of increasing your retirement savings, but creating a dedicated retirement plan will hopefully see you retire at an age that you perceive to be reasonable.