A census conducted in 2016 in Greater Sydney shows the total workforce is 2.2 million. It accounts for 20.7% of the total-labour force of the country. Even though there is no compulsory retiring age in Australia, reports show that, on average, people retire anywhere between 55-60 years in Sydney. After retirement, many of them depend on a pension as their primary source of income. But, due to the rising inflation and the exponential cost of living in Sydney, the pension income might not be enough for retirees to enjoy their free time and put their retirement plans into action. A pre-planned additional income is necessary to ensure a care-free retirement. It may seem like a daunting task, but retirement financial planning is a crucial aspect of everyone’s life. By consulting the best Financial planner Sydney has to offer, one can make the task a lot easier, clear and organised.
Here are a few things that people must keep in mind as they begin their retirement planning. It covers all the crucial points as recommended by experts to ensure that everyone gets the comfortable and stress-free retirement they always dreamed of.
Understand The Post-Retirement Needs
The first stage of financial planning involves being clear about one’s economic situation, needs and goals for the future, which includes retirement. One must determine the location, responsibilities, travel plans, and lifestyle that they hope to have post-retirement and the expenses it would entail. Considering all these aspects will help them understand how much they will have to invest and save during their years of earning and track their expenses accordingly. Investing in stocks and property, cutting down on costs, knowing one’s risk tolerance, liquidity preference would all be included in the retirement planning. Hiring a trusted Financial planner in Sydney would help them plan all the aspects.
Weigh All the Retirement Benefit Options
The effort put into retirement planning must successfully accumulate the required amount to cover all the post-retirement expenses. The most popular strategy that financial planners suggest is superannuation, as all the investment returns done as a part of super have a taxation policy. It ranges at a maximum of 15% during the accumulation period, i.e., when the person is working, and 0% after retirement. The government also provides tax-free pension and tax deductions as income through superannuation. Other income options include account-based pension, annuity, age pension, senior concessions, government benefits, investing lump sum amount or a combination of these options.
Diversify the Post-Retirement Income
Along with the government-based or company pension income, as mentioned above, investment forms a significant stable source of income post-retirement. There are multiple investment options available in the market for people, depending on their revenue, expenses, risk tolerance, and goals. These include real estate, property, businesses, mutual funds, stocks and shares. Real estate acts as a tangible asset as it offers a stable income through rents, especially for those who have a low to medium risk tolerance. Those looking at a higher return and willing to take higher risk can invest in shares and mutual funds from early on. For this, one must consult a professional Financial planner in Sydney who can help them make sure that they start early with their investments.
Consider the Debts
Debts can come in various forms like personal debt, mortgages, investor debts, student loans and credit card debts. One must understand that all debt is not created equally. Good debt gets incurred from strategies to accumulate long-term wealth, like real estate investment. When managed well, one can generally gain good returns and eventually alleviate the debt. Bad debts, like credit cards and diminished wealth, do not generate any revenue. It is not advised to have bad debts closer to retirement. Therefore they must consult a financial planner and settle them early on.