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Retirement Planning

I am sure for many of you retirement is a long way off, or not something you have thought about much. It is really important to start thinking about it early and making preparations for when you do eventually retire.

There are different ways to prepare such as superannuation or self funded, but before you decide which way you want to do it have a think about what age you want to retire and how much you will need in retirement.

For example if you want to retire at age 55 and your expected life span is 85 you will need to fund your lifestyle for 30 years. More than likely your financial needs in retirement will be less than now because you won’t be traveling for work, you will hopefully own your house, so no mortgage payments, no ‘children related expenses’ such as schooling and if you have planned well you will not be in debt and also won’t be ‘saving for retirement. You will probably have some increased expenses such as medical needs, but overall retirement is often cheaper.

So if you plan well, have no mortgage payments or debt, how much will you need in retirement? That is something only you can answer.

Now you know how much you will need, how do you plan on doing it?

If you are or ever have been employed you will have a superannuation fund (if you live in Australia, it’s called different things in different countries, but basically it is a retirement fund.) If you have had a few different jobs you might have a few different superannuation funds. Find out how many you have and roll all the funds into one account. If you don’t you will be getting charged more fees than you need to be.

Next if you live in Australia and earn under $ you have the option of utilizing the government co-contribution, where they will match up to $1,000 dollar for dollar any extra payments you put in yourself. So if you put in $1,000 extra yourself, on top of your employers contributions and you are eligible the government will put in another $1,000 for you.

Since employers only have to pay 9% of the value of your wage into superannuation it is unlikely that those payments alone will be enough to fund your retirement. But superannuation is not the only option.

You could choose to do a self managed super fund, but unless you have a few hundred thousand dollars it is generally not the best option. But do some research, get financial advice and check it out if it is something you might be interested in.

Another option is planning yourself. I do not plan on relying on mine and my husband’s superannuation. Since it cannot be accessed until we retire and retirement age can be changed at anytime by the government and I plan on being financially free before then, it is not something I focus on.

Instead I am focused on paying off our debts, learning to live within our means, owning our house outright and investing in various methods to ensure we have ample money to live off.

Planning your own retirement is basically just investing wisely so you have money to live off. Things such as rental properties, shares, large cash sums, owning businesses and doing things like publishing books, creating eBooks etc that pay royalties for as long as they are available are all great ways to provide income with little or not effort on your behalf in retirement.

So when do you plan on retiring and how do you plan to do it?

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2 Responses to “Retirement Planning”

  1. Great post Kylie! I think more young people should start thinking about retirement, even though it is still years away.

    I plan on retiring sooner than later, I definitely don’t want to wait till I’m 65. I started investing years ago in quality dividend paying stocks. I plan on living off the dividends, and through other passive income sources.

  2. Mindful Mum says:

    Hi Kylie, I REALLY need to get this one sorted, we’re in late 30s & we have nothing organised. Not good. On my (urgent) list. Also wanted to say that I love your blog – I’m now ebaying, party planning and book-selling! Cheers!!!

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