This article is submitted to us by Peter McKnoulty, Director of Transition Planning Australia, part of the Career Money Life Supplier Community.
Here are eight questions to ask yourself, to discern whether you are on your way to being financially prepared for retirement. It’s important to seek Financial Advice, and here are some of the issues you will need to work through.
1. Are you on your way to paying of your debts?
Pay off your debts as soon as you can. Ideally you want to retire debt free. If you do have a lot of debt, it is worth speaking to a professional about the best way to pay off that debt before you retire.
2. Will you be relying on government benefit?
If you will be relying on government benefit in anyway during your retirement it is important that you do not leave it to the last minute to apply.
3. When can you access you super?
When you can access your super depends on your date of birth. When you have figured out when you can access your super you will need to find out how you want to receive it. You can receive it as a lump sum, as a stream of retirement income, or a mixture of both. Speak with your financial advisor about which will be the best option for you.
4. What will be your overall retirement income?
Over the course of your working life you will have accumulated a variety of investments and other assets that can be used to fund your retirement. When you are going through the process of transitioning into retirement you will need to review these anticipated assets and resources to decipher what your overall retirement income is likely to be and how these assets can be used to fund your retirement. If you are planning on converting your savings into income speak to a financial planner about making an income plan so that you have an income from your first day of retirement. If you have other sources of income that you plan to use in your retirement make an estimate of the income you will receive from these sources.
5. Do you have a retirement budget?
When you have a clear estimate of how much income you will be receiving in your retirement it is a good idea to create a budget. Consider what sort of lifestyle you would like to have and what you would like to achieve in retirement. How much will this cost you on a monthly basis? Of course you cannot predict exactly what is going to happen over the entire course of your retirement but you can make estimates and plans that will prepare you and give you a guide to how much you can realistically live on.
6. Have you taken your budget for a test drive?
Before you retire you need to ensure that you can live off your proposed retirement budget. You may find there are expenses you have not considered, or things that you thought you could live without but can’t. This will allow you to have a taste of what retirement will be like, and make adjustments where necessary.
7. Have you thought about where you will live in retirement?
It is important to consider where you will be living when you retire. If you own a house, consider any repairs that might need to be done down the track and factor these into your budget. If you rent your accommodation, how much will you need to continue paying rent throughout your retirement?
8. What is your health care plan?
Have you considered how you will be paying for your health in your retirement? You can never be sure how much you will need as you never know what the future will bring however, it is important to be as prepared as possible. Shop around for a good health and life insurance, talk to a financial advisor about how to manage a health care plan in your retirement.
Bonus Question: Do you have a financial Advisor?
After you have answered all the questions the next step in the process is visiting a financial advisor, if you haven’t already got one, to run your financial retirement plan by them to ensure everything is in order. Your financial advisor will be able to help you with a smooth transition into retirement and also help you with ongoing financial advise throughout your retirement.