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Four easy steps to retirement planning

When it comes to putting a plan in place for your retirement, you may be wondering where to start or even if you need to prepare at all.

Last updated: July 31st 2022
​Before you can start planning your retirement, you need to fully understand your financial position and your retirement goals. [Source: iStock]

​Before you can start planning your retirement, you need to fully understand your financial position and your retirement goals. [Source: iStock]

Key points:

  • Have a clear vision of what you want your retirement to look like so you can put adequate plans in place
  • Be aware of what you can and can’t afford in retirement, as well as your current financial situation
  • Keep an eye on your retirement plan progress to ensure you are meeting all your goals

However, retirement needs to be planned for. If you don’t, you may find yourself running out of money or unsure how to pay for necessary things in the future, like home care or aged care. And you don’t want to be making snap decisions, like selling and downsizing your home, unexpectedly.

So where should you start, what is the easiest way to plan for your retirement?

We have broken down retirement planning into four simple steps with the help of Alteris Financial Group.

Step 1: Set your goals for retirement

Your retirement will look different from other retirees because it will be very dependent on your financial situation and your overall goals for retirement.

So what does your retirement mean to you? What do you want it to look like? Do you intend to travel a lot or do you want to continue working limited hours while easing yourself into retirement life?

Some older parents want to provide a “gift” to their children to help them out, provide them with a new car, or go towards their house deposit. While others are planning to go on a big overseas trip once a year or a 365-day caravan adventure around Australia.

These expenses can be big and impact how much money you will have going into retirement, so the question is, can you afford this and what do you need to change so this can happen without hitting your retirement funds too hard?

Having a general understanding of what you want your retirement to look like is crucial when putting together your retirement plan.

Step 2: Understand your financial position

Before you can start planning your retirement, you need to fully understand your financial position and whether it fits within your retirement goals.

The value of your assets should include:

  • The family home
  • Investments (including property, stocks, etc)
  • Your superannuation
  • Current cash flow (like your current salary or if you receive a pension of some kind)
  • Future cash flow (like the Age Pension or Carer Pension; If you are a couple, do intend to stop working at the same time or gradually start cutting down your hours? Or how do you intend to receive funding during your retirement?)

With an understanding of your current financial position, it can help you gauge whether you need to limit your lifestyle expectations for retirement or if you have enough in assets to provide for your dream retirement.

Once you have a good idea of your financial position, along with a vision of what your retirement will look like, you can move on to your next step – which is getting help from an expert.

Step 3: How do you get there and what to consider

Engaging a financial planner is the best way to understand and put in place plans that will help you reach your retirement goals.

Financial planning can be confusing when it comes to retirement, especially as you likely haven’t planned for such a long and huge part of your life. You can expect your retirement days to take up a third of your life!

A financial planner can help you make your retirement dreams true, or as close to, by modelling various scenarios and then implementing the plan that will best work for you and your situation.

All financial planners in Australia are required to leave you in a better position than when you first started with them, so you can be assured that an expert will be able to assist you in reaching your retirement financial goals in the best way possible.

Step 4: Regularly monitor your plan progress

To know if you are being successful in reaching your plan goals, you need to monitor your progress on an ongoing basis.

As you have likely experienced in life, things can change unexpectedly, especially as you move closer and closer to retirement. These changes may impact your lifestyle and expenses, which could have a run-on effect on your retirement funds.

For example, if you have reduced mobility, you may not be able to travel as much as you expected, or if you require higher levels of assistance at home, you may have higher medical expenses than was anticipated in your original plan.

This is why a financial planner can be beneficial, as they will help you monitor and understand your progress, and make appropriate adjustments when your situation changes.

Set up a financial meeting

Before you begin your retirement plan, you should organise a meeting with a financial retirement expert.

Financial advisors or retirement planners can empower you to make wise financial decisions about your retirement.

Some people are apprehensive about getting help to plan for their retirement because they have misconceptions about the service or the cost.

However, financial assistance for retirement can be really important to ensure your finances last, you can read more in our article, ‘Myths about retirement financial planning‘.

To find a financial advisor or retirement planner based near, use the directory.

The information detailed above is General Advice and has been prepared without taking into account any of your specific individual objectives, financial situation or needs. Before making any investment decisions you should first consult with your financial adviser to verify that the decisions you may make are appropriate to your individual circumstances relating to your financial affairs.

How are you planning for your retirement? Tell us in the comments below.

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