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You've established a career, have a stable income, and if you're lucky, you've bought property which has appreciated. Your 40s is the perfect time to create a plan for a stress-free retirement.
Heading into your 40s is an exciting time; you've established a career, have a stable income, and if you're lucky, you bought property which has appreciated.
For most people, having a sound financial plan that equips them with the freedom to retire stress-free is a lifelong goal. Now more than ever, is the perfect opportunity to reassess your finances and create a plan for a stress-free retirement.
The success of your retirement plan hinges on several important factors. As we head into the new decade, this article will give some clarity on how to maximise your super and get your retirement plan heading in the right direction.
A recent survey conducted by Finder, found that an astonishing 58% of Australian's do not know the balance of their superannuation fund. Results showed that most Australian's were either "not interested" or didn't know how to check it.
According to the latest forecasts, the average Australian couple needs at least $690,000 to retire comfortably at 67 (the Age Pension eligibility age), while the average Australian single person needs at least $595,000.
Using the numbers above, if a person finished work at age 65 and needed to fund 20 years in retirement, it would only leave $34,500 per year. Now, when you consider volatile factors like inflation, those numbers will leave you struggling to eat and pay your bills. Just think of what a cup of coffee might cost in 2045!
At DPN, securing your financial future is our top priority. We use a much more realistic figure of between $1,500/week (Net of tax $78,000 pa) - $2,500/week (Net of tax $130,000) in today’s dollars. Then we to allow 3% inflation per year on that amount to keep up with cost of living.
There are countless online calculators that help ‘guesstimate’ how much you need, but these are too simplistic and don’t consider characteristics unique to you. Just ‘getting by’ is probably not your vision. Because of this, calculating how much money you need requires the support of a dedicated team of professionals.
When the time comes for a financial plan, the ‘cookie-cutter’ approach just doesn’t cut it. Online calculators fail to consider that ‘financial modelling’ for example, plays an integral role in demonstrating how varying strategies affect your cash flow and retirement plan.
Planning for your retirement requires a multi-phase process that constantly evolves
Planning for your retirement requires a multi-phase process that constantly evolves. Understanding the ‘why’ is the fun part but paying serious attention to a retirement roadmap should be your primary focus.
Remember, a solid financial retirement plan needs to incorporate elements that include your financial goals, net worth, budget, and cash flow. It also requires constant evaluation to assess if the original objectives, goals, and timeframes are realistic and viable - so having a team of experts in place is a must.
Choosing which fund is best for you is a complex question. Take your time to research and make arrangements to speak with qualified experts who have demonstrated success; after all, your life’s savings are on the line.
Retail Super funds are by far the most prevalent type of fund and are controlled by wealth management companies and other financial institutions. With higher fees yet numerous investment prospects, retail super funds have an incentive to yield margins for their shareholders. Expert investment managers guide both the management and investment of your money.
The minimum amount that your employer must pay into your superannuation fund is 10% of your gross salary. You should consider extra contributions; most taxpayers can get a tax deduction for personal super contributions. Limits apply but it is definitely worth talking to your accountant about.
Naturally it is wise to re-evaluate your current retail super fund(s) and consider consolidating them into the one, or ones that are best performing, have lower fees and insurance that suits your needs.
An SMSF, a Self-Managed Superannuation Fund, is a super fund that is set up and managed privately by you. But don’t be put off if you find this concept daunting - most people leave the day-to-day operations to a team of experts, like a qualified accountant or financial adviser. More than 1.1m Australians are in a SMSF.
You need to have a balance of approximately $200,000 for an individual to set up an SMSF. An SMSF allows you to choose your investments, giving you complete control over your financial future. An SMSF also enables you to include up to four members of your family or friends.
As you head into a new decade, a future of prosperity and fulfilment awaits and investing in property provides the perfect chance to grow your super.
No matter what your age, investing in property has been a successful strategy many of our customers have used to build wealth. We have found many people approaching the 40 milestone (and younger) keen to get started.
Dylan* is one such client who, on our advice, purchased a dual income property in Googong, just over the border from the ACT in New South Wales. The property is positively geared at close to $23,000 a year. What this means is an additional income stream now to help pay down debt and build long term wealth. Plus, an asset appreciating in value over time – just think of how valuable this property might be when Dylan considers retiring.
At DPN, we regard property investment as a long-term approach to building client wealth as they move towards retirement.
Our affiliate network includes specialised accountants, while, at DPN our team of property strategists and mortgage brokers provide customers with individualised, strategic advice on building wealth.
Because when it’s all said and done, the most important part of any retirement plan is ensuring you have a team of dedicated and trustworthy professionals you can count on.
We invite you to contact us today to discover, without obligation, how we can help you with your retirement plans.
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