Financial Planning for 50’s

50

Have you just turned the big five-o and given a thought to your retirement yet? Do you have superannuation? Will it be enough? What about the age pension?

A lot of questions, huh? Because the Australian government are concerned that there will be more people retired (and on a government pension) than earning and paying taxes by 2030, they basically stiffed anyone born after 1 July 1960. If you were born after this date your superannuation will become further from your reach.

At one time it used to be that you could retire at age 55 and take your superannuation as a lump sum and also collect the age pension (subject to asset tests) from the government. That all changed some time ago when the burden of pension payouts increased where people took their lump sum, took a long extended holiday travelling around the world and then returning home broke and in need of financial assistance.

The government, in their infinite wisdom (tongue in cheek) took us to task and froze our superannuation (preserved) in the belief that we should all fund our own retirement and survival and not rely on their handouts.

So, if you are around fifty then you can’t touch your superannuation until you are at least sixty years old. I feel for the tradesmen and others whose failing health provides a continuous challenge to put food on the table because the government are also changing the age pension requirements where retiring at 65 will be off the table for younger people today. The age pension requirement will be creeping out to 67.

Anyway, most superannuation providers will have some sort of calculator on their website so you can project your benefits at retirement. If not, you can call them and they will do it for you. You can also work out what type of age pension you will receive (in today’s dollars) and work out any asset test issues. Now is the time to plan.

At writing, the age pension for a couple is around $1,200 per fortnight. Do you have enough superannuation to cover the difference between that and what you will need? What if you don’t?

Now is the time to start planning. You need to start giving some thought to your living arrangements in terms of renting or home ownership. Both have their challenges in retirement. You might own your home in retirement but there are rates, insurance and maintenance that need to be considered. You also need to work out now what type of lifestyle you are planning to have at retirement. I quite often see the pensioners hit the cheap Sunday roast buffet at the local sports club and wonder if it’s the life they intended to have in retirement or are they just playing the cards they have been dealt.

I encourage anyone hitting fifty to take some time and give some serious thought about your needs in retirement. Now is the time to set your goals and take action to remove any debt you hold right now. You have ten to fifteen years to go before you consider retiring and it will be here before you know it. Planning NOW for the FUTURE starts today. Good luck.

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