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18/05/2020

Having Enough Savings in Retirement

With retirement just around the corner for some Australians, several questions often arise at this time regarding proper planning for your golden years. Here at Pillar Financial, we are committed to providing Australians with insight into how to manage wealth for retirement and, in due course, have put together this post detailing how to ensure you’re as well-prepared for a retired life of relaxation and enjoyment as you can be.

Planning for retirement should commence as early as is possible, to provide enough time for you to plan and save a nest egg for your years not spent working. We are fortunate in Australia that the federal Government enforces mandatory superannuation contributions from employers. Your superannuation ought to be your number one asset during retirement, so it can help to make additional contributions for as long as is possible to ensure you have enough in the bank to sustain your retirement. Unfortunately for many Australians, super may not be enough. This is why investing in property should also be considered. Property investing can provide an additional buffer and mitigate potential shortfalls in superannuation.

Before even thinking about super contributions, though, it’s worth noting that the most successful retirement savings plans are put in motion by individuals who have paid off their mortgages. Entering retirement with an outstanding balance on your mortgage is never a good idea, as you’ll be using your superannuation to make the final payments on everything. This is not an ideal situation, as you may find yourself strapped for cash down the track of retirement when forced to pay for ordinary expenses. An ideal outcome would be to pay off the remaining balance on your mortgage well before retiring, and then make additional superannuation payments with the savings.

Another strategy to ensure you have enough in retirement is… well, to never fully retire. Seniors who maintain a strong work-life balance in their older years often display a much happier demeanour than those who have left the workforce early. Even working two additional days per week will provide income that supplements your pension to provide a higher standard of living in your golden years.

If you are to retire, you need to calculate your budget well before saying goodbye to the office for the last time. Work out what your expenses are per annum and then multiple that value by 20, to ensure you’ve budgeted enough for yourself until your final moment. Keep in mind that even if you’ve paid off your mortgage, there will still be property and possibly capital gains tax to consider. Once you have a figure in mind for your retirement, ensure that that figure exists between your superannuation and savings account, factoring in any income from a pension or part-time or casual employment during retirement, before you officially retire.

For all financial matters and help, contact Pillar Financial for more information. We’re Melbourne’s experts in wealth creation and management, and are available today to sit down with you and discuss your finances. Retirement planning is just one of our available services, check out the rest of our services page for more information on other offers from Pillar Financial. Call us today – 1300 730 309.