How to Start Retirement Planning
Last updated on June 29th, 2022
Not a lot of people think of their future as early as they should. Your retirement, however, should be something you have thought of the moment that you started working, maybe even earlier. According to the Australian Bureau of Statistics, most Australians retire at the age of 63 years old. Most of these people retire not because of their own personal choice but because they have either reached the age of retirement or the age of eligibility for superannuation.
That sounds great for a lot of people, but wouldn’t you want to prepare for your retirement? Don’t you want to decide on your own when you want to retire?
Retirement Income
Before we can look into how you can start retirement planning, you must first understand where your sources of income would from when you retire. If you have absolutely no intention to work, there are at least three sources of retirement income available to you by the time you reach the age of 65:
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Superannuation
Superannuation refers to money set aside or contributed by your employer to a super fund while you’re working, for you to receive upon retirement. The basis of this contribution is your ordinary time earnings. From 1 July 2014, employers should put in 9.5% of your ordinary time earnings into your super. There are a variety of funds for your super, and you have the right to decide which fund you’d want it to be in. You can even contribute to your own super if you’d like.
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Age pension
Depending on your assets and other sources of income, you may primarily receive an age pension. Age pension is an allowance you receive from the government upon retirement. People who have been a resident of Australia for ten years are those qualified for an age pension.
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Other Investments
Other investments can vary from income-earning assets, managed funds, income bearing accounts, time deposits, and insurance. It will depend on how you diversify your assets.
Retirement Planning
Planning for the future is hard, especially if you are still struggling with finances. However, there are a few things you can do to prepare you for the future or help you see what you can expect:
- Assess your financial standing. Look into all the money you have as well as assets. See when you can apply for your age pension and if at your current standing you are eligible for superannuation. From then, you can have a projection of how much, more or less, you can earn. You can also use government sites that calculate your super and pension age.
- Make a financial plan. In your life, you will certainly not settle with just keeping your money in the bank. Of course, you will eventually have to spend it on trips or hobbies. Take them into account so that you can properly focus on a solid financial plan. Talking to a financial advisor may help in diversifying assets.
- Use your money wisely during retirement. Retirement money isn’t there for you to spend in one go. It’s about managing money that you’ve already worked hard on to enjoy more time with family, friends, hobbies, and adventures the best way you can. Money management is constant in our lives, and we are meant to maintain it even when we retire.
- Assess your life insurance policy
Asses your life insurance needs and coverage so that you or your family are not left with debt, should the worst happen. It is worth comparing your policy once a year or every two years to make sure your coverage and policy is the best suited for you.
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