Top Tips To Secure Your Future With Early Retirement Planning

Saying goodbye to the workplace and the daily grind is one of life's most significant and exciting events, ranking alongside receiving the keys to your first home, landing your first job and buying your first car. Retirement is a significant life event that is a time many Australians look forward to, but it also requires meticulous planning to ensure you are financially secure and can enjoy your well-deserved golden years to the fullest. 

This hard-won freedom from work, however, comes at a high cost. As a generation, we now live longer lives than before, with today’s 65-year-olds expected to live an average of 84.6 years for men and 87.3 years for women. Hence people are spending more time in retirement than ever before and require more funds to support themselves after leaving the workforce than previous generations. To ensure retirement is a relaxed and carefree phase of senior’s lives, they must carefully plan their finances to enjoy their retirement and ensure it is stress-free and a smooth transition. We will discuss a few things to keep in mind for planning your retirement early, and share a few tips to get you started.
It’s not as tricky as you may think! And it is possible to thrive, not just survive.

The Right Time to Start Retirement Planning

It really is never too early to begin laying the groundwork for a relaxed retired lifestyle. We tend to believe that we have control over when we leave work, but the fact is, accidents, illness, redundancy and other factors that result in an earlier-than-expected exit from the workplace can be forced on us. 

Research firm Investment Trends, in its report, studied Australians' attitudes towards retirement and post-retirement issues. The research revealed that only 46% of Australians over 40 feel prepared for retirement. 

The decision to retire is never made in haste, and it is a gradual process that requires you to consider your financial needs. The right time will be determined by whether you want to quit entirely or reduce your working hours and whether you are ready to lose the support system a structured workplace offers. There’s a lot of things to consider, which is another reason planning early is key.

How to Get Started on Planning Your Retirement

Start by asking questions that define what your senior years will look like:

• Does your retired life see you jet-setting on exotic travels worldwide?

• Are you looking forward to a quieter life away from the hustle and bustle? 

• Will you pay for your children's college?

• Have you brought private health insurance for yourself and your family? 

• Are you planning to downsize and move to senior apartments and independent living on the Lower North Shore of Sydney?

• Do you want to relocate to be closer to your family? 

Whatever your specific circumstances are, like most things in life, careful planning and foresight can pay off handsomely in the long run. 

Set Financial Goals
Now that you have looked at how retired life should look – the next step in retirement planning is a thorough assessment of your current financial situation.
You must know the answers to the following key questions: 

• When will your retirement start? 

• How much will you need to fund a lifestyle of your choice after retirement?

• How much will you need to save before retiring? 

As you plan for retirement, it is essential to clearly understand:

• Your debt

• Income

• Assets

• Expenses 

Knowing the big picture of your finances will help you more clearly determine the best retirement plan for you. Remember that you may need to fund three decades without a salary, which is a big adjustment. 

Generally, financial advisors suggest you require two-thirds to 80% of your pre-retirement income. According to the Association of Superannuation Funds of Australia (ASFA), singles need a yearly income of $29,139, and couples need an annual income of $41,929. A more ‘comfortable’ lifestyle that includes more leisure activities and perhaps travel plans, would push that amount to $45,962 for singles and $64,771 for couples, respectively. You can also use one of the many online budget calculators and prepare an estimate based on your current situation. 

Tips To Save For Your Retirement

Once you've done your homework, it's time to start working towards preparing and securing a healthy financial cushion. To begin with, don't rely solely on your employer's mandatory 10% super guarantee. 

• Salary sacrificing your pre-tax income into your superfund provides significant tax benefits, with amounts taxed at 15% – much lower than the income tax. 

• Organize a separate emergency fund for a rainy day.

• Ensure you pay your bills on time and in full to avoid unnecessary fees. 

• Try to reduce as much debt as possible and close up those credit cards, student loans, and home mortgages in advance.  

Seek financial advice if you need it.

The Bottom Line

Although the Australian government has a pension system, it may not be enough to support the lifestyle you desire in retirement; so, it is essential to plan your retirement. Follow the guidelines and tips above, and always seek financial advice before taking the steps necessary to ensure a permanent and relaxed holiday from work. Always plan early for a happy retirement!