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FINANCE | Plan now for a positive future

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Many of us would like to think that ‘older’ means ‘wiser’, but when it comes to money that isn’t always the case.
The complexity of Australia’s superannuation system doesn’t help.
There are common mistakes that retiring and retired Australians make. What are those mistakes and how might you avoid them?
Underestimating how much you need
The Association of Superannuation Funds of Australia, ASFA, Retirement Standard calculates that a ‘comfortable’ retirement for a couple costs $60,843 a year. For singles the figure is $43,200 a year.
To fund these levels of income, the ASFA calculates that a couple will need a nest egg of $640,000, and a single $545,000 at retirement.
Retiring too early
Australians retiring today can expect to live until their mid 80s. For retirees in their mid 50s, that means finding a way to pay for a further 30 years of life.
The obvious solution to retiring too soon is to work longer. This provides a double benefit: it extends the savings period allowing a greater sum to be saved, and delays the point where withdrawals start to eat into accumulated funds.
Not topping up super
Making additional contributions into superannuation can really boost super savings.
Strategies involving salary sacrifice, spouse contributions and government co-contributions should all be in play well before retirement.
Withdrawing super as a lump sum
Superannuation can be withdrawn as a lump sum after retirement, and if you are over 60 it’s all tax-free. But then what? Common choices are to take ‘that’ big trip or renovate the home. If you’re thinking of dipping into your savings in a big way, make sure you understand the potential implications for your future lifestyle.
Carrying debt into retirement
It can be hard enough keeping up mortgage, car finance or credit card interest payments even when you’re working.
It can become a real burden in retirement. Where possible, do your best to pay down debt.
Paying for unnecessary insurance
Free of debt and without financial dependants, you might not need to maintain the same level of life and disability insurance you once required. Also, premiums can become expensive as you get older.
The run up to retirement is an ideal time to review your insurances, a task best done under the guidance of your financial adviser.
Invaluable advice
While the expectation might be that life should get less complicated as you get older, this short list reveals that’s not always the case.
Many of these mistakes come with a high price tag but can be avoided by seeking professional advice.
Your financial planner will be able to assess your specific circumstances and help you develop a plan for your retirement. But don’t wait until you actually retire. As you can see, it’s never too early to start planning.

The entire April 10, 2019 edition of The Weekly Advertiser is available online. READ IT HERE!

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Posted on Apr 10 2019

Posted by on Apr 10 2019. Filed under Business & Finance, Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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