The 5 steps you need to take if you want to retire at 50
The decision of when to retire is rarely made overnight. It’s a major life milestone that requires careful thought and planning.
It’s no surprise that the decision to retire early requires even more planning, especially when it comes to your finances.
So, how do you do it right? How do you give yourself the best shot at retiring early?
Having the choice of when to retire is an enviable position to say the least.
Less work stress, more time to travel and relax.
But it can also be a little nerve-wracking to take the plunge. Especially if you’re unsure you’ll be financially okay in the long-term.
How early is too early? 60? 50? What about 45?
There really is no right or wrong retirement age.
With careful planning and preparation, you can choose your own retirement age
Plus, what’s more, retiring early could be good for your health. 1
Sleeping later, having more time to exercise and socialise, and no crazy work stress might actually be good for you?! Who would’ve thought?
So now that we’ve covered off on why retiring early could be a good idea, let’s jump to the most important question of all:
When do you want to retire?
If you’re unsure, it may help you to understand when other Australians are intending to replace their work uniform with a Hawaiian shirt and pair of khaki shorts.
According to the Australian Bureau of Statistics2:
- 7% of Australians intend to retire before the age of 59
- 23% of Australians intend to retire between the age of 60-64
- 50% of Australians intend to retire between the age of 65-69
- 20% intended to retire over the age of 70
While it’s not common to retire before the age of 50, it’s certainly not impossible.
There are, however, limitations around when you can access your much needed superannuation depending on your year of birth.
According to ATO, here is when you can access your super account in Australia3:
|DATE OF BIRTH||AGE YOU CAN ACCESS SUPER|
|Before 1 July 1960||55|
|1 July 1960 – 30 June 1961||56|
|1 July 1961 – 30 June 1962||57|
|1 July 1962 – 30 June 1963||58|
|1 July 1963 – 30 June 1964||59|
|From 1 July 1964||60|
Superannuation and retirement go hand-in-hand, which is why it is so important to know how much super you have, how much you will need, and when you can use it.
If you want to achieve an early retirement, understanding your superannuation fund is vital.
So, what else do you need to do to accomplish that highly sought-after early retirement?
Here’s your 5-step early retirement super guide:
Step 1: Consider your health
What many young retirees forget to include in their retirement strategy is a healthcare plan.
While most of us hope to have a healthy and active retirement lifestyle, unexpected medical conditions and costs are likely to increase with age.
Research shows that medical costs are one of the biggest retirement expenses. The average Australian retiree couple is estimated to spend between $4975 and $9900 on healthcare costs every year. 4
Whether your solution is to take out private health insurance or put aside extra savings for medical costs, consider medical costs when creating your retirement plan.
Step 2: Have a housing plan
Many pre-retirees focus on getting their investments in order and neglect to think about how their house fits in. Dealing with mortgage repayments in retirement years is not only undesirable, it can also be against the terms of your home loan.
The family home is one of the biggest assets for retirees
Preparing your home for retirement means different things to different people. To best prepare for early retirement, you may like to consider:
- Paying off your mortgage in full
- Downsizing your home/planning for relocating
- Completing major renovations
- Making costly repairs before leaving the workforce
- Preparing your home to be more accessible as your mobility changes in older years
Step 3: Secure your income stream(s)
Losing your regular income can be a bit of a shock to the system and something you should prepare for when retiring.
To assess whether you are financially fit for an early retirement, you should take the time to review all your income streams and investments. This will help you to gain an understanding of whether you’ll have enough money to live on during your golden years.
Find out how approximately much income you’ll have when you retire on with MoneySmart’s Retirement Planner and Calculator.
Step 4: Think about how you want to spend your extra years in retirement
If you are planning to retire early, it is more important than ever that you know how you’ll want to spend your time.
Do you want to travel around Australia or the world when the pandemic settles? Maybe you want to spend your time pursuing a new hobby or volunteering for a charity you care about.
Consider your short-term and long-term retirement objectives and make sure you are taking strides towards reaching them.
Step 5: Seek advice
If you are planning to retire early, seek support from a professional financial adviser. They can help you create your goals and personalise your strategy to ensure you are financially secure in the long-term.
Putting everything together in a comprehensive, tailored financial plan is often the best way to find out if your dream of retiring early can become a reality.
If you’re ready to retire early, CCFPG’s experienced Retirement Advisers can help you achieve all your retirement goals and feel confident that you will have the financial means to enjoy the retirement you want.
Disclaimer: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429..