How to avoid ruining your chances of retiring when you want to…

The volatility in the financial world over the last few years has impacted on retirement nest eggs and delayed the retirement plans of many people. However if you really want to ensure that you retire in your late 80s, follow these steps. Unfortunately a lot of people do.

Spend too much

Spending more than you should on things you believe you should have, but could easily live without is a great way to delay your chances of retiring. Buying consumer items like new cars and big television sets, which depreciate in value, can significantly reduce your retirement funds.

Save very little

If you start saving early for your retirement, you only have to put away a relatively small amount each month. Compound interest is a great wealth creator. If you don’t start saving till your 40s or 50s, you’ll have to put away a lot more every month. Unless you’ve been contributing to a super scheme for a long time, it may not be enough.  So if you want to retire at a time that suits you, you had better start a serious savings plan.

Disregard taxation issues and Centrelink benefits.

This applies more to people who are already retired. You can easily pay more tax than you should by not utilising tax breaks available to you. Many people think that because they are retired they won’t have to pay much income tax. They could easily be paying more or less than they should. Get some professional advice. It could save you a lot.

Don’t take an interest in your superannuation

Most super funds let you make some of the broad investment decisions on what sort of strategy you want for your super funds. If you don’t take an interest in what’s happening to your super funds, you’re unlikely to get the best possible performance from them.

Don’t educate yourself about investments

Many financial planners suggest that you should invest some of your money into superannuation and some of your money outside of superannuation. Investing outside of your super scheme gives you far more flexibility. You can’t build your wealth if you don’t know anything about investments and investing.

Adopt the ostrich-style planning strategy

As well as planning to save enough to retire on, it’s important to give some serious thought to a range of “What if” situations, and have a basic idea on how you would handle them. Ignoring all the likely challenges you’re likely to face, could mean that when something unpleasant happens, you’re totally unprepared. Some of the “what ifs” that many of us will experience are a serious illness or death affecting your partner or a close family member, being unable to earn an income for an extended period, losing your house if it’s uninsured or underinsured. While it may not be pleasant to think about how you would handle a major tragedy, it’s still a good idea to consider the possibility and plan for it..

Thinking about your retirement 3 months before it happens

A financial planner can’t help you grow your wealth if you come to him just prior to retiring. All he/she can do is make suggestions as to how to structure your finances more efficiently. A planner needs time to make a difference

The transition to retirement is a period of major change and many people struggle as they try to adapt to a totally new lifestyle. You will probably have to deal with a range of emotional, relationship and family issues as you try to decide what kind of lifestyle you want. All of this takes time. You need to start thinking about some areas of your retirement years ahead.

Your retirement years can be some of the best years of your life, but like most worthwhile things, you need to work on them. You’ll find lots of useful advice in our book “The Rest of Your Life – How to make it as good as you want” It’s available on our web site – www.mylifechange.com.au

Have you retired or are considering retiring? What are your plans and have you thought out all the above? Tell us below.