If you want to retire early or are forced to retire early, having a retirement plan can help your money last longer. If you’re looking at retiring early in Australia, you’ll need to develop a plan to make your savings last while continuing to enjoy the favourite things in your life. This may be due to personal preferences or circumstances beyond your control. Either way, it’s important to have a solid plan in place.
You will need to have enough money saved up to cover your expenses for the rest of your life. This includes your housing costs, food, healthcare, and any other expenses you may have. If you do not have enough saved, you may need to work part-time or find supplementary sources of income.
Tips for Retiring Early in Australia
1) Set Up a Retirement Fund
You need to make sure you have a retirement fund set up. This will help you have a comfortable retirement. There are many types of retirement funds you can set up, such as superannuation, a self-managed super fund, or an annuity.
To calculate how much you may need in retirement, you need to think about your essential and discretionary expenses. Your essential expenses are things like groceries and utility bills, while your discretionary expenses are things like overseas trips and a new car. You may want to consider having extra money for your discretionary expenses as well.
The AFSA Retirement Standard shows the breakdown and calculations for the average Australian to fund a comfortable and modest retirement.
2) Build Your Investment Portfolio
You need to make sure you have an investment portfolio that is diversified. This means that you need to have different types of investments, such as shares, bonds, property, and cash. This will help you to reduce the risk of losing money if one of your investments does not perform well.
3) Pay Off Your Debts
You should consider trying to pay off your debts as soon as you can, such as credit cards, personal loans and your mortgage. This will reduce the amount of interest you pay and will free up money to invest in other things.
Also, if you are able to pay off your debts before you retire, you will not have to use part of your savings to continue making repayments.
4) Consider Healthcare Plans
One of the biggest costs that people face in retirement is healthcare. If you do not have a good private health plan, this can really cut into your retirement savings if you experience a serious illness or accident.
Look at what medical expenses both Medicare and the Commonwealth Seniors Health Card will cover and determine if and what type of cover you should purchase. It’s important to remember that not every retiree is eligible for the Commonwealth Seniors Health Card.
5) Find Ways to Increase Your Income
There are a few things you can do to try and increase your income in the lead-up to retirement. You could try talking to your boss about a pay rise, increasing your hours in your current role, or taking on more work. You could also try putting a few hours of overtime in occasionally.
Many retirees also enjoy turning their previously unpaid hobbies into a profitable side hustle in retirement – should the opportunity present itself.
Prepare for Early Retirement with Central Coast Financial Planning Group
Retiring early in Australia can be an exciting prospect or extremely overwhelming – it will depend on the circumstances in which you retire and how prepared you are. It’s important to do your research and make sure that you are making the best decision for yourself and your family.
Prepare for your financial future and retirement with Central Coast Financial Planning Group. We are financial advisers based in Erina on the Central Coast and can help you plan for the retirement years you deserve. Call us or book online to secure your complimentary first meeting with our advice team today!
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 Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.