Taking Control of Your Finances

Taking control of your finances means that ‘there’s no better time than right now to plan for your retirement.’

There is plenty to think about when it comes to retirement.

Getting ready both emotionally and financially is critically important to achieving your goals.

Whatever path you choose, one of the big challenges is working out how to pay for it. The financial aspects are often complex, so getting reliable and trustworthy information early is vital.

Often people get in touch with a financial adviser five years from retirement. This is at a time when the most conservative years are the five before retirement through the five following. Leaving plans this late often means your goal is simply to preserve money rather than grow it because you can’t tolerate risk — leaving little scope to make a dramatic difference. Even more reason to ensure you are taking control of your finances sooner.

Unplanned savings are better than no savings at all but to get the most out of your retirement, you need to figure out where you want to be and how you’re going to get there. Given we’re all living longer and our retirement savings need to last longer, it’s never been more important to make smart financial decisions.

So let’s wind back the clock. You’re in your 30s and 40s. Sure, it coincides with more pressing demands – marriage, house, children – but consider this: each month you delay cuts significantly into the total savings you have when retirement comes.

So what should you do?

• Taking control of your finances sooner rather than later
• Make a long-term financial plan
• Find ways to grow your retirement income

Don’t fall into the risk of not making a decision, which is often greater than risking it all for a quick gain late in the game. If you start retirement savings early, you can afford to be aggressive and put money into riskier funds. If your fund loses value, you have time to let it grow again. However, if you’re getting close to retirement (55-plus) and suddenly your investments lose 40 per cent of their value, it will have a huge negative impact on your financial comfort in retirement.

Taking control of your finances as soon as you can to identify:

1. What assets (house, savings, investments) you have and how much they are worth
2. How much super you have and when you can access it
3. When you can apply for the age pension and whether you are likely to be eligible

The next step is to look at how your needs might change over time. Perhaps you’ll want to travel in the first few years of retirement. Later, you may want to replace your car or renovate your kitchen, even relocate to a foreign country. You might even consider downsizing or moving into a retirement village.

One of the greatest fears we all have is running out of cash. This can be avoided through setting up simple strategies to stretch retirement income and make your money last longer.

Seeking financial advice early can’t be underestimated. Taking control of your finances can be hard work even if you have some financial knowledge. This is where an adviser really comes into their own. They will help you focus on how to use different income sources to fund different stages of your life. The aim will be to plan for the long-term, not just the next five years.

An adviser can help to assess your current position, identify your short and long-term needs, set up financial strategies for achieving your goals, navigate our complex tax system, look into social security implications and consider estate planning issues.

It’s really about working out how much money you need for the life you want in retirement.

To set up the right financial strategy in your 30s, 40s or 50s, contact your trusted Financial Adviser.

If you’d like to chat about finance, please contact us.

View more