Superannuation is a crucial part of Australia's retirement savings system, designed to provide financial security…
5. Factors to Consider for Your Financial Retirement Plan
Everyone would like to live a comfortable and secure retirement where you would not need to work anymore. All you have to do is sit back and enjoy the rewards of the hard work you’ve spent during your prime years.
However, a fun and carefree retirement requires building a financial cushion that supports your goals and aspirations. Although retirement planning may seem overwhelming, it is an essential step to ensure a stress-free and comfortable retirement.
A bit of planning goes a long way; you should be able to attain your retirement dreams. By setting your retirement goals, you can figure out the ideal amount you need to raise and how long you need to meet your goals. Some smart investment strategies can enable you to grow your retirement savings.
This article will run you through everything you need to know about retirement planning.
Your Time Horizon
You can form a strategy based on your current age and your expected retirement age. You will be able to handle a higher level of risk in your portfolio if you have a longer time before your set retirement age.
People with over 30 years before their expected retirement can put their assets into riskier investments such as stocks and bonds. You have more time for your money to mature and accumulate.
If you are older, your portfolio should focus on income and preserving your capital. Your investments need to be less volatile, which may also mean they have fewer returns than high-risk investments. However, you can also consider inflation a lesser concern as your cost of living is less likely to drastically increase before your retirement.
Your Retirement Spending
Considering realistic post-retirement spending habits will help you sort out the ideal size of your retirement portfolio. It is unrealistic to assume that your retirement spending will be 70-80% of your spending before retirement. You may have unforeseen medical expenses and unpaid debt to consider.
If you would like to splurge on travel and bucket-list goals in your retirement, you also need to allocate these into your retirement savings plan.
Consider the risk you are willing to take to grow your retirement investments. This applies whether you are managing your own investment decisions or if you have a professional financial adviser.
You will need to balance your concerns for risk with the investment returns you would like to aim for. You can allocate some income aside for risk-free investments such as government bonds for your required expenses and another portion for high-risk investments with higher returns.
Certain aspects of planning a well-rounded retirement plan require the help of professionals such as lawyers and accountants that specialise in the field.
You would need to consider having a proper estate plan and life insurance coverage to ensure that your assets are distributed in the manner of your choosing. This ensures that your loved ones are protected from financial hardships after your death and having to deal with an expensive and often lengthy probate process.
It’s Never Too Late to Plan for Your Retirement
Financial planning for your retirement is vital to ensure a comfortable and secure retirement. You may need retirement advice from various professionals to help ensure that your retirement plan is sufficient for your goals and that your family is protected in the event of your death.
Are you in need of help with retirement planning in Newcastle? At Newcastle Financial Planning Group, we can ensure that your retirement will be spent doing whatever you want, wherever you want, and with whoever you want. Head on to our website to learn more.
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.