For many people, the decade between ages 50 to 60 represents a time of significant change. Some changes may be welcome, while others may be more difficult to manage. Either way, it is as important as ever to plan your way through this time of greater freedom and opportunity but also of uncertainty. The following are financial planning issues common to people in this age group.
What sort of lifestyle?
Sometimes life has been so busy there has been limited time for choice – school and university fees, mortgage payments and work pressures have been enough to worry about. Between age 50 and 60 it can be a challenge to choose what you (and your partner) really want for the next few decades.
How much do you need in retirement?
This will depend on how you live. For instance, Westpac/ASFA calculations* show that a couple in NSW needs $33,907 a year to live modestly and $ 58,605 to live comfortably, assuming they own their home.
The below graph below from ASFA shows the split of expenditure based on a modest lifestyle in retirement.
Setting a budget for your life in retirement is a vital step in achieving your retirement wealth target. Do you have enough invested to live comfortably throughout your entire retirement, which could be as long as 20 or 30 years?
Are your investments suitable?
Now is the time for you to ensure that your investments are working as hard as possible for you. If you have managed funds, shares or investment property, are they the best assets for your changing situation?
If you have life and income insurance policies, do you have the right level of cover for your current circumstances? There is no point paying premiums for cover you don’t need – but take care in cancelling cover that you may not be able to get back.
Are you taking full advantage of superannuation?
Superannuation is clearly the most tax-effective way to accumulate money for retirement and provide capital and income in retirement. Taking advantage of investing in super can make a big difference to reaching your retirement target.
Have you planned beyond your lifetime?
People aged in their 50s will often have growing families as grandchildren start appearing. Some will have more than one family after separation, divorce and second marriages. Taking time to think about how you want your assets to be distributed after your death can save a lot of heartache for those left behind. Don’t forget that the payouts from life insurance policies and superannuation don’t necessarily form part of your estate and may need to be distributed separately from your will.
With all of these things to consider, the first step in updating your financial plan may be the hardest – but it is also the most rewarding.
Contact our licensed financial adviser at Leenane Templeton on 02 4926 2300 who can help you focus on the next stage of your life.
Source: *Westpac ASFA Retirement Standard; http://www.superannuation.asn.au/resources/retirement-standard and click on calculator link