How to make the most of your retirement income When you move into retirement, a…
4 Essential Steps You Can Follow to Avoid Running Out of Money
As we near the end of a year filled with more twists and turns than the US federal election, there is an additional weight on the shoulders of many older Australians.
With the economy coughing and spluttering, employers big and small are making moves to cut costs, boost profitability and shore-up their long-term sustainability. Sadly, this has resulted in significant job losses and a sharp increase in redundancies across Newcastle and the Lower Hunter.
No matter your age, losing your job can be a tough pill to swallow – worse still if you’re closing in on retirement.
If you find yourself in this situation, it’s difficult to know what the next best step is.
For many, particularly those who are yet to accumulate sufficient wealth for retirement, the next step is normally set in stone – search for a new job.
But if you had plans to retire in the next few years, you may be considering whether it’s possible to retire now. An early retirement could certainly be an attractive option by comparison!
It may seem like a waste of time getting a new job only to have to throw in the towel again after a short amount of time. Besides, at an older age, you may be thinking getting a new job will be impossible anyway. Who is going to hire me when they know I’m going to retire soon anyway?
Whichever situation your find yourself in, it’s an uncertain time and it’s completely normal to not know what to do next. In fact, just 44% of Australians actually feel prepared for their retirement1.
But it’s time we changed all that. It’s time you felt more confident, optimistic and prepared for your future.
So, let’s dive in and take a look at 4 key things that can make your pathway to retirement a little clearer and a little less stressful.
4 Essential Steps to Plan for Your Future if You’ve Lost Your Job Before Retirement:
1. Review your financial position
This is the first step you should take. Look in-depth at all your assets, savings and living expenses. The absence of a steady income can take a huge toll on your savings. You may need a new budget plan for the meantime and cut some costs until you decide what your next step is.
This terrific MoneySmart Retirement Planner can help you calculate your retirement income and show you how taking some time off from work, or even retiring early, will affect your finances.
2. Reconsider how you want to retire
It’s definitely time to review your retirement plan. If you don’t have one – don’t despair – now is a perfect time to get one in place.
If you have your dream retirement plan in place and are thinking this will ruin everything, think again. There are options and help available for you.
You may need to adjust your current budget and your retirement budget to ensure you will have enough money to sustain your lifestyle in retirement years. The good news is that your living expenses usually decrease over time so you may not need to make as many sacrifices as you think.
According to the Australian Bureau of Statistics, the average age of retirement is 55.4 years old2. If you’re close or even past this age, and your finances are secure, losing your job may actually be a blessing in disguise!
3. Search for a new job
If you’ve followed steps 1 and 2 and realise you don’t have enough savings for you to enter an early retirement, seeking a new position may be your best next move.
Finding a similar job to your last may seem difficult at first but enter the process with an open mind. With years of building up experience, knowledge and contacts, you are definitely bringing something to the table that the average fresh-faced 25-year-old doesn’t have!
You could also consider taking your skills to a different industry. The booming gig economy may also provide some inspiration and opportunities.
Or you may like to take a step back and move into a part-time role that you would enjoy.
Think about what your hobbies and passions are. If you enjoy taking care of your own garden, maybe you can start a small maintenance business and do this for other people. Do you enjoy woodworking and making furniture for you and your family? Consider growing this passion and starting a woodworking business!
Finding a job that you enjoy – a job that doesn’t feel like work – may mean you can spend a few more years working than you originally planned to. Along the way saving more money for a better retirement.
4. Find new income sources
Is it time to get creative in how you make your money? You may like to consider a new investment opportunity or adjusting your investment portfolio to create a recurring income stream.
Additionally, consider if the Age Pension will help you. According to a report by The Association of Superannuation Funds of Australia3, most Australians retiring in the next few years will rely on the Age Pension for some of their retirement savings. You may actually be in a position to receive more money from the Age Pension than you originally thought.
A Certified Financial Planner can help you calculate your income sources and see if the Age Pension is something you can use to supplement your income and help support your lifestyle.
Remember most of all that making small, smart financial planning decisions today can have life-long impacts on your future. You have worked hard for your retirement and you should not have to give up on your dream because of unexpected circumstances.
Feeling stressed and stuck on what to do next? We are here to help you secure your dream retirement, no matter what life throws at you.
Book a complimentary initial appointment with one of our Retirement Advice Specialists and secure the kind of future you can look forward to. For your convenience we have offices located at Newcastle – The Junction (NFPG), Central Coast – Erina (CCFPG), and Sydney CBD (SWA).
1 Investment Trends 2016 Retirement Income Report. https://www.adviservoice.com.au/2017/03/industry-wide-collaboration-necessary-better-prepare-australians-aged-care-costs-investment-trends-2016-retirement-income-report/
2 Australian Bureau of Statistics. https://www.abs.gov.au/statistics/labour/employment-and-unemployment/retirement-and-retirement-intentions-australia/latest-release#:~:text=In%202018%2D19%2C,53%25%20in%202016%2D17.&text=0.5%20million%20people%20intend%20to%20retire%20in%20the%20next%205%20years.
3 Better Retirement Outcomes: A snapshot of account balances in Australia. The Association of Superannuation Funds of Australia [ASFA]. https://www.superannuation.asn.au/ArticleDocuments/359/1907-Better-Retirement-Outcomes-a-snapshot-of-account-balances-in-Australia.pdf.aspx?Embed=Y
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 and Sydney Wealth Advisers are subsidiaries of Coastal Advice Group which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.