Many people have a solid retirement savings plan set up for their golden years, but the longer people live, the more their financial requirements will increase.
According to the latest figures released by the ABS,
“An Australian male aged 50 years can expect to live another 32.9 years, and a female another 36.3 years.”
As life expectancy continues to increase, it means your retirement savings will have to last longer. However, there are some other factors that could affect your retirement savings other than life expectancy.
The Cost of Ageing: Making Your Retirement Savings Last
A lifetime is a long time to live on one lump sum. If you want to continue to live your life the same way, perhaps even with some small luxuries, you’ll need to be able to save up some additional money for retirement, especially if you live longer than expected on average.
Aside from medical expenses, your retirement savings may also need to cover other miscellaneous costs such as unforeseen circumstances, the maintenance of your home, and leisure activities such as holidays away or spending time with loved ones.
Here are 3 tips to help you ensure that your retirement funds will last longer:
1 – Estimate The Time Till Your Retirement
Your current age and the time you expect to retire can form the basis of an effective retirement strategy. If you know you have years ahead of you until you reach your retirement phase, then you may want to consider adjusting your portfolio risk.
For Example:
- If you have 30-plus years until your retirement, you may find that changing to a high-risk portfolio can be beneficial. This way, you can reap the benefits of high returns during this long period of time.
Once you are nearing retirement, you can adjust to a more conservative portfolio risk to ensure you are gaining steady returns with less risk of a substantial loss on returns.
2 – Accumulate Enough Savings to Cover the First 20 Years of Retirement
The golden ticket to your retirement savings. When you reach retirement, you could potentially receive an Aged Pension, but it will be unlikely to be enough to fully fund your retirement. Taking steps to grow your retirement is vital. You may want to consider making concessional contributions to your super fund.
There are two types of contributions you can make to increase your superannuation balance:
- Concessional Contributions: includes the compulsory contribution of 10% of your income before tax and other contributions such as salary sacrifice. These types of contributions are capped at $27,500 per financial year.
- Non-concessional Contributions: are personal contributions you can make to your super fund which are capped at $110,000 per financial year.
3 – Create a Retirement Plan as Early as Today
It’s important to be realistic when setting your expectations for your retirement. You should ask yourself:
- What are my retirement goals?
- Would I like to travel in my retirement?
- What does my retirement lifestyle look like?
- How much do I currently have in my retirement savings?
After addressing these questions, you may want to start mapping out your retirement plan. By planning ahead, you can make sure you are well aware of all the opportunities that can allow you to grow your retirement savings and ensure your money won’t run out halfway through your golden years.
Seeking advice from a retirement planner can help you ensure you have the right financial strategies in place to achieve your ideal retirement.
4 – Consider Establishing An Estate Plan
Financial security for your family and loved ones may be your number one priority. By ensuring your estate is organised, you can ensure your family and loved ones will be financially protected in the event of your death.
Estate planning should be considered an integral part of your overall financial plan, as it can provide you with peace of mind knowing your legacy will be left to the ones who matter to you most.
Learn more about what estate planning is and how you can get started here: How To Build your Estate Plan.
Start Your Retirement Plan Today.
If you want to give yourself the best chance for a comfortable retirement, you’ll want to have a retirement plan in place, so you can understand how to best save your money. With a retirement plan, you’ll have a solid understanding of where your money is going, how to optimise your spending decisions, and what to do when things go wrong.
At Hyland Financial Planning, we believe hope is not a plan and leaves too much to chance. We believe the sooner you receive strategic retirement planning advice—a plan—the more likely you are to achieve what you have in mind for a secure financial future.
If you need help planning for retirement, come to Hyland Financial Planning and get a head start! Our company was founded on the desire to build a collaborative relationship in which our financial advisers share an ambition to improve the lives of our clients with strategic planning, wealth creation and ultimately—wealth success, leaving nothing to chance.
