With the new year well and truly upon is there is no better time to start thinking about your finances for the year ahead and come up with some financial goals for 2023.
As enjoyable as it is to scribble down your resolutions and create a bucket list of things you’d like to achieve or experience in the next 12 months, it’s also important to check you finances to see if you’re on track for a stress free retirement filled with enjoyable and memorable experiences.
Financial Planner Matthew McCabe from Newcastle Advisors said that “it’s important for individuals of all ages to set financial goals, and this can be especially important for those over 60 as they may be nearing or entering retirement.”
“Financial goals can be an important part of achieving financial stability and security, and can support individuals to make the most of their financial resources,” he says.
McCabe also spoke of the importance of some particular financial goals that may be relevant for those over 60.
“Ensuring that you have a plan in place for retirement. This includes setting aside sufficient money to support your desired lifestyle during retirement. This may involve contributing to superannuation and/or taking into account your Age Pension benefits, whilst identifying your capital longevity,” McCabe explains.
“Paying outstanding debts, such as mortgages, credit cards, personal loans, car loans, to reduce the burden of debt in retirement.
“Building an emergency fund to help you weather unexpected expenses, such as medical bills or home repairs.”
Given the rising rate of inflation and the ongoing cost of living crisis, McCabe stresses that “in this economic environment, it is important to understand how you can protect yourself and your retirement savings against inflation.”
“Some of these strategies include; avoid holding too much cash, re evaluate your portfolio, explore physical assets, look into inflation linked investments, and revisiting your budget,” he says.
Partner at HopgoodGanim Lawyers Brian Herd suggests when planning your finances for the year ahead it pays to create a budget.
“Being aware of what costs you’ve got upcoming, and what to prepare for is a great step to take, and it might be helpful to check out the averages for Australians,” Herd explains.
“Cost-of-living pressures are affecting so many Aussies. Keeping a close watch on your expenses could help you to work out some costs to trim. You could also re-evaluate some of the services and providers you are using and see if better options are available.
“The Association of Superannuation Funds of Australia (ASFA) has a Retirement Standard that’s been released regularly since 2004. It has a detailed budget breakdown where you can see typical costs for a comfortable or modest lifestyle for expenses related to your housing; electricity and gas; food; transport; clothing and footwear; home phone, broadband and mobile; leisure; and health services costs.”
Downsizing your home is a popular option for many over 60s who are not only looking for a change of lifestyle but who are also looking to get the most out of their finances.
“If you are thinking of downsizing your living arrangements to save money, consider your options and take the time to consider any hidden or unknown financial or tax implications,” Herd suggests.
“With Centrelink, for example, various tests can apply individually and collectively that could catch you out financially.”
Although nobody likes to talk about death, given that it can be confronting and uncomfortable, Herd recommends being “proactive” in regard to this matter.
“While there may be an upfront cost, getting your life planning sorted with documents such as a Will, Enduring Power of Attorney and Advance Health Directive can pay dividends and bring peace of mind your finances will be managed as you want them to be at the right time,” he says.
“Whatever your situation, consider seeking professional advice from qualified experts who are good at what they do.
“In the famous words of a former US Secretary of State, there are known knowns, known unknowns and unknown unknowns. He wasn’t, but might have been, referring to ageing, including the hidden costs and uncertainties we all deal with.”
If you’re still struggling with inspiration as to what financial goals to set for the year ahead or are finding it difficult to narrow down what you should focus on, Starts at 60 invited our readers to share their own financial goals which they are hoping to achieve for 2023.
Sharon* has decided to take up a casual job this year “to take advantage of the increased amount pensioners can earn before pension is cut.”
“Hoping the govt will extend the increase after Dec 2023. If they don’t, I will be dropping from 2 days, to 1 day,” she says.
“Living solely on the pension is not easy – just to have that extra, without struggling, to pay for rates, health insurance, lawn mowing, pool maintenance (on my small little home). Insurances have gone up ludicrously.”
While Sharon is looking to bring more money in Rhondha* is looking to “cut unnecessary spending”.
“Most of us have houses bulging with stuff. I am sure we could live for five years & only pay our bills & buy basic food. You don’t need fancy holidays & nights out. Cook your own food & stay home . It will save you a fortune,” she says.
Lorraine* plans to enjoy a few nights in this year in order to save some money this year.
“Just stretching what I have to survive. Am turning into quite the homebody so shouldn’t be too difficult,” Lorraine explains.
Although many seem to be planning on cutting costs and making savings where they can, Maria* has a more novel approach to getting on top of her finances.
“Winning lotto,” she reveals.
Whatever your financial goals may be as we enter the new year, McCabe highlights that it’s a “good idea to review your financial plan periodically and make any necessary adjustments as your goals, health and circumstances change”.
*surnames have been removed for privacy reasons.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.