Updated: May 18
Financially, you’ve been sailing along pretty easily. Your income has been covering your costs of living, and you haven’t been too concerned about the future. Or maybe, you’ve been secretly worrying about retirement, but have been too busy to do anything about it. After all, the kids weren’t supposed to have stayed at home so long! Or maybe there finally seems to be an end to that mortgage you’ve been paying off.
Suddenly you find yourself in your late fifties (or early sixties) and retirement is nearing. Will we be ok? What’s everyone else dong?
These are the 5 most important things to consider for the 5-year countdown towards retirement.
Be accurate and honest about your affairs. Aside from your home, where does every bit of your wealth currently sit, and what is your net wealth right now in dollars and cents. If you change nothing and continue as is, what will this position look like in 5 years’ time? Will it be enough?
Now you know the lay of the land, are you doing everything you could be with your super and other assets? Not to mention, taking advantage of every government grant, loophole, and tax-incentive, to ensure you’re making the most of these last 5 years? Are you giving yourself the best chance?
Wherever your wealth sits (particularly within superannuation), begin to allocate one year’s worth of retirement income, out of growth investments, into a conservative option . That way, the day you retire you will still have the majority of your retirement capital in growth investments, earning you a good return. You’ll now have a nice 5 year income buffer sitting in the conservative stuff (this is your lifestyle protection). Now, no matter what happens in global investment markets, you can retire confidently with 5 years of capital which will cover your lifestyle and allow for the rest of your capital in growth investments to recover and grow. Be in control of your retirement and make the start 5 years out.
Begin to consolidate your wealth and simplify your financial position. After a hard life of work we can end up with bits and pieces everywhere. Multiple super funds, shares in this and that, properties, managed funds and even $5,000 under the mattress. Consolidation and simplicity can have significant impacts on costs, taxes, and most importantly time. So ensuring your wealth isn’t overly complicated or tax-inefficient is critical as you approach the big day.
Is my Super fund up to scratch? For the vast majority, Super will be our major retirement asset and the vehicle that we can invest tax-free throughout retirement. It will replace your regular income flow. Your provider needs to be low-cost and have good quality investment management. If you’ve never made a provider choice, chances are you could be doing better.
These last five years are critical, which makes good advice invaluable. A good adviser can give you peace of mind in knowing you’ve done everything possible to set yourself up for the best retirement possible.
Now all that’s left to do is sit back and enjoy these years. Get your financials in order early so you can enjoy every moment.
If you would like to discuss your personal situation, we’d love to hear from you!
*Please note that the information provided is of a general nature only and has not been tailored to your personal circumstances. Please seek professional advice prior to acting on this information.