Worry free retirement? Yes, it’s possible.
How do you save for retirement and how much do you save for retirement? When thinking about the later years of your life, those two questions are probably what come to mind. You put money into a super, your employer contributes as well; you decide what kind of retirement you want to live, and you hope your funds grow over the years. This is how retirement planning usually goes for many people, but did you know that there are mistakes that you can avoid that can help you live out your retirement worry free?
Rather than looking back on life and wishing you could have done more and saved more, avoiding mistakes and being prepared can have a much better outcome. Do you realise that if a couple who are both 65 years old have 1 million in retirement savings and they draw $60,000 per year and their average rate of return is 5%, the money would run out at age 84 when taking inflation into account? People are healthier and living longer than ever, which means:
The age pension system favours home ownership over renting.
By taking care of your health during your younger years and continuing to do so, you will have less health related bills to pay which can be used towards your retirement savings.
Your children and others may need a helping hand from time to time, but give careful consideration that you’re not risking your retirement funds in order to be helpful.
Assets like your home and rental properties can help provide further income opportunities for you during your retirement years.
That 5% rate of return mentioned above would only last until the age of 84, but if you earned 9%, it would make it to age 99! Even a 1% increase in return can make your money last for years longer than a lower rate.
A financial planner can help you determine how to get on track or stay on track for retirement. Ensure you avoid these mistakes. Plan to speak to a planner, as they can point out additional mistakes to avoid and help with additional strategies.