Retirement planning is crucial to helping you achieve your best retirement. Most want their retirement lifestyle to include travelling, taking up new hobbies and other recreational activities that provide enjoyment and fulfilment.
‘When should I start planning for retirement?’- is a common question!
It’s important to know that retirement planning shouldn’t be left until a few years prior to the end of your working days. It should be something you start to think about when you first start full-time work, so you are able to make adjustments along the way that can help you keep track of your retirement goal!
But how do you prepare for retirement? What should you do first? At what age should you start pre-retirement planning?
Let us help you out…
1. Should You Start Planning Retirement at the Start of Your Career?
At the beginning of your career, it’s understandable if retirement planning isn’t at the forefront of your to-do list. However, it is considered one of the best times to start pre-retirement planning.
Ideally, as soon as you start earning money, you want to start thinking about saving a portion of your earnings each week and take advantage of the power of compounding. Through compound interest, even the smallest amount of money per week can make a huge difference over time.
At this time in your life, you may have outstanding debts, such as student debt or credit card debt. Establishing a payment plan that is tailored to your financial situation can help you repay your debts sooner.
The sooner you are able to pay off your debts, the sooner you can start focusing on saving for your future.
Another option that may suit your current financial situation, is a salary sacrifice strategy. If you are earning more than you ever have before, you are also likely paying more tax than you ever have before. Sacrificing a portion of your pre-tax salary to your superannuation can make a huge difference to your super balance in the long-term – plus it can help you pay less tax throughout the year.
A financial adviser can help you determine how much of your salary you can afford to sacrifice, whilst helping you effectively minimise your tax.
2. Track Your Retirement Savings In the Middle of Your Career
At this stage in your life -assuming you are well-established within your career and have a reasonable investment portfolio – it is now a crucial time to start pre-planning your retirement.
It is likely that your superannuation fund has built up over your working life.
This is the perfect time to do a superannuation health check and determine if your super will be enough to fund your entire retirement.
If it’s not quite enough, that’s okay. You still have time. This is the benefit of starting your retirement plan early! It’s important to be realistic, so you don’t become overwhelmed or fearful of not achieving your goal.
The importance of checking your retirement savings early, will provide you with time to help you make the necessary adjustments to your current finances to reach your retirement goals.
Necessary adjustments may include:
- changing how your super is currently being invested. You may want to consider looking at a growth investment option. Take into consideration where you are at in life, your risk tolerance and your current financial goals.
- Making extra, voluntary contributions to your super, if you are in the financial situation to do so. Boosting your super can make a huge impact on your super balance in the future and earn you one step closer to financial freedom during your golden years.
A financial adviser can help tailor the right investment strategy based on your current financial situation and needs.
3. Seek Personal Financial Advice When you are Nearing Retirement
You are nearing the end of your hard-working years and almost at the stage of enjoying your retirement years. Now should be the time to really focus on your finances and ensure you are on track to meeting your retirement goals.
It’s important to seek financial advice at this stage to help guide you through the retirement planning process, making any necessary adjustments before you retire, ensuring your retirement savings will last the distance.
Often a financial adviser can help simplify the process and reduce the overwhelming effect of adjusting to a whole new life. It’s important to remember that personal financial advice should be tailored to your financial situation and goals, and is in your best interests. Make sure you find the right financial adviser who can meet these expectations.
The truth is, there is no “right” time to start planning your retirement. Ideally, as early as possible is the best answer. As long as you have a stable income, you should start your retirement planning journey. Every step you take towards your goals will make a difference.
Let us help you pre-plan your retirement here at Prominent Financial Services. We specialise in financial advice in Adelaide and are passionate about helping people achieve financial success by making smart financial decisions.
