Retirement can be a scary and uncertain period for anyone, especially if you aren’t financially prepared. A lack of financial preparation can result in hard times during your retirement, the inability to fulfil your dreams and/or travel the world, and a reliance on a government pension (something you definitely don’t want!). The following tips will help you save enough money for your retirement, as well as helping you understand how to use it.
Make a long-term financial plan:
The first thing you need to do is set down your long-term financial plan on paper. There are a number of things you may need to think about, and can affect your plan, including:
- Your hobbies. Do you want to take up a new hobby? Are your existing hobbies expensive to maintain? If so, then you need to set aside money for these.
- Do you want to travel? If you want to travel at all, be it around the world or to the nearest city, then you need to include the costs of this in your financial plan.
- Do you plan on moving to a retirement village? This will obviously cost money, and could even be quite expensive if you move into a fancy one.
- What big expenses are you likely to have in the future. Do you have medical problems which could cost you a lot? Are you going to need a new house or car in the near future? If so, then make sure you take this into account.
Ensure that you have an income!
The most common source of income after you have retired is the return on invested money. It doesn’t matter how you invest the money (it could be put into shares, into savings in the bank, or into any other form of investment), what matters is that you understand and are comfortable with the way it is done. You need to also understand that investment never comes without risk: make sure you place your money in a number of different places so that if you happen to lose some from one investment stream (it is rare, don’t worry!), you still have plenty left over.
See if you can get a pension, and when this will be:
Although a pension doesn’t give you enough money to live comfortably, it can comfortably supplement your super and investment income. Finding out whether you will be eligible for a pension and if so, at what age, is very important as it allows you to include this in your planning.