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The Ultimate Cheat Sheet On Retirement

When I think retirement, I think leopard print pants and matching jacket on some exotic cruise sipping Pina Colada’s (if I can still stomach this delicious beverage at that age) and sometimes I imagine myself playing lawn bowls with friends. But to be brutally honest I have a feeling neither of those will happen. There are 2 main factors (for most people) in deciding when they will retire. Usually it is the age you can access your superannuation, or your qualifying age for the Age Pension from Centrelink. In Australia currently women and men aged 65 are eligible for the age pension, however the government announced in the 2014 Federal Budget that the age is set to increase to 70 years of age from 2035. This won’t happen overnight, but it will happen. From 1 July 2025 the qualifying age will start to rise by 6 months every 2 years. In most cases people still heavily rely on the pension as a key part of their retirement plan, even when you take into consideration your superannuation and other investments. Generally this does not mean you will need to work to age 70, just that you will need to rely on your super and other savings between retiring from the workforce and reaching the age pension age. Just like everyone else after decades of working, I want to retire and not have to stress about whether I have enough funds to keep on going. So I have collated a basic checklist to get you all to start thinking and putting a few things into place to get the results you deserve. Start Saving Today A rule of thumb is that most retirees will need about 80% of their pre-retirement income to maintain their standard of living. That doesn’t include ‘bucket list’ activities, travelling or even hobbies – however in saying that if you do pay your mortgage off before you retire the money spent there will eventually cover your hobbies. A good start is to set up an account that deducts a total of 10% of your income automatically and never ever use that money until you retire. Invest Investing in long-term growth assets such as shares and property that fall outside super. This can provide a regular source of income once you retire but also give you access to your money now. Additional Contributions Making additional contributions to your superannuation through salary sacrifice can be an easy way to top up your super while reducing your taxable income. This is because you don’t pay income tax on salary sacrifice contributions to super and they are instead taxed at a maximum of only 15%. For more ideas contact your Financial Adviser to go through and plan out a retirement strategy that is best suited for you. We are never too young to start thinking about retirement.