You have just reached 40 years of age and are probably busy raising a young family, paying off a mortgage and retirement seems so far away. Start planning early because before you know it you will be turning 50 or even 60 and not have even given your retirement or your finances much thought.
With many Australian’s living longer, that generally means that retirements are getting longer too. With more years to enjoy your retirement, you will need to ensure your money lasts as long as you do.
Here’s our tips to get your thinking about retirement even at age 40 or close thereabouts:-
- Define Your Retirement – you probably have some idea of how you would like to spend your retirement. Focus on your goals and experiences for now. Don’t focus on budget right now. Try to be as specific as you can be, for example, most of us want to travel. Instead of travel, list the trips you want to take, the countries that you want to visit. Limit your list to your top give goals.
- Take Stock of Your Assets – start preparing a list of what you have from how much you have in the bank, your superannuation and or retirement account. What about those non-traditional assets that may help to fund your retirement? You may also have luxury items such as antiques, paintings or restored cars. Just list them.
- Evaluate Your Health – to get the most out of life and retirement – you want to be as healthy as possible. Schedule your checkups including your annual physical. With each of your health professionals, make a plan to improve and/or maintain your health. This includes eating healthy, exercising and getting enough sleep. Commit to staying mentally alert by reading and maintaining contact with family and friends.
- Decide How Much You Want (or Need) to Work – you should consider you could turn that passion or hobby into casual or part-time work. As you consider your retirement goals, take into account whether you want to or have to work (even in a part-time capacity).
- Create a Retirement Budget – it is important to start planning by tracking your income and expenses for a couple of months. This will give you an idea of how much money you will need in retirement to support your lifestyle. You will also need to a financial checkup of your investments. If you are carrying debt, ensure that your budget includes the appropriate repayments.
- Find Ways to Cut Expenses – be better prepared by saving more. Find new ways to cut your expenses and free up your money.. Start by listing your bills and see where you can save. It may mean eating out once a week instead of three or even cutting back to one movie night a month. Cancel the subscription to the magazine you never read, cancel the cable (foxtel) subscription and sign up to Netflix or Stan instead. Turn these monthly payments into monthly transfers back into your savings account.
- Don’t Ignore Debt – don’t ignore your debt as a way to save more. Cutting debt now will mean loss stress and worry when you retire. Pay off your smallest debts first, regardless of interest rate. This gives you a sense of accomplishment and will motivate you to tackle the bigger debts.
- Save Extra’s – Windfalls – should you be fortunate enough to get a bonus or a raise at work, consider saving that immediately. Remember it is not money that you are used to spending so it will be easier to increase your savings without any monetary pain.
- Get Protection – ensure that your insurances are current and up-to-date. Ensure that you have all the right home, car, building, health and life insurances. If your insurance coverage is inadequate, now is the time to increase it. Put money aside now. Preparing now means you won’t pay later.
- Give your super a boost – if you are earning a relatively substantial pay, it may be possible to give your nest egg a boost. Speak to your employer about salary sacrificing, or contributing to super from your pre-tax income. This means less take home pay now, however it adds to your super and is also tax effective. If you are on a lower income you may be eligible for a government co-contribution.
Retirement can be something that you are looking forward to, however, managing your finances can be hard work.
Talk to us today about getting retirement ready, even when turning 40.
General Advice Warning
This blog contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
If you decide to purchase or vary a financial product, your financial adviser, Charter Financial Planning Ltd and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.