Wealth Connexion shares the Dos and Don’ts of Retirement Planning.
Planning for your retirement isn’t something to be put off until the last minute. It takes time, patience, some investing smarts, and usually a bit of assistance from professionals.
There are many strategies involved in retirement planning, some smart and some not-so-smart, but it’s important to understand and weigh the options before committing. Check out a few options when considering retirement planning strategies below!
Retirement Planning Strategies
One of the best retirement planning strategies for Australians is investing with super. This is because of the low tax rate on investment earnings within the fund, the high compound interest the money in the account earns, and the ease with which you can contribute to your retirement funds. By asking your employer to divert just a small portion of your paycheck to super each week, it can be an almost invisible way to continually invest in your future and can be started as soon as joining the workforce. Another great strategy for saving using super is to make extra contributions while still working to invest more heavily into your future while saving on tax in the meantime.
It is important, however, to look at comparisons between different super funds. Different funds have different levels of fees you must pay, and each fund may return a different amount to its members over the long term. Talk to a professional financial advisor to chat about your options in more in-depth.
Planning an investment property purchase is also a common and effective retirement planning strategy when timed right. This mortgage is considered a good tax and is attached to an appreciating piece of property. If purchased early enough, the mortgage could be paid off before retirement and this would greatly cut down on costs during retirement. Furthermore, when you’re ready to move into care, the house can be sold to introduce another injection of income.
Retirement Planning Mistakes
When weighing retirement planning strategies, it’s important to also consider the mistakes people make as well.
One of the biggest mistakes when saving for retirement is withdrawing money prematurely from your superannuation account. A lump-sum withdrawal too early can mean you lose all the compound interest you’ve gained over the years. Furthermore, if your super drops below $6,000, all linked life insurance could be automatically cancelled. It’s one of the best ways to save for retirement so think before you really must take money out.
Not getting advice from professionals is also quite a big mistake to make. Sure, you can read up on different retirement planning strategies across a range of websites, but you may be reading outdated information and strategies that don’t apply to your financial level and situation. Even if you want just a bit of advice and help whilst keeping in control of your investments, it’s better than receiving no help at all from the experts. Book a consultation session with our team to assess your situation and come up with a plan moving forward.
Finally, don’t underestimate how high the cost of living in retirement is. If you don’t live within your means and budget wisely, your money can run out and it’s possible you’ll have to get back into the workforce, rely on family, or live much more modestly than you’re used to.
Talk to our team of professionals in Brisbane today for a personalised retirement plan or check out our Superannuation Services here.
