It’s never too early to start retirement planning – in fact, the earlier that you start, the better your retirement life may be.
Starting to save for your retirement income also means that you will also be better prepared should an unexpected event occur along the way – such as redundancy, relationship breakdowns, or market downturn.
ipac financial expert Colin Lewis stated that most people generally do not start thinking about planning retirement until they are about 10-15 years away from retiring.
“People in their mid 40s all of a sudden start to take an interest in their superannuation and retirement savings,” said Mr Lewis.
Back when the government had an attractive co-contribution rate, it was not uncommon for younger people in their 20s to begin to save for their retirement even if it was their parents or grandparents making the contribution.
“It was effectively a tax free guaranteed return on your investment, so why wouldn’t you do it? You used to put a dollar in and get $1.50 from the government. While it’s now only 50 cents, it’s not a bad way to start,” said Mr Lewis.
However, as people in this day and age are beginning to prepare for retirement later in life, there are some consequences that can be seen.
The biggest downfall from leaving retirement planning until later in life is being unprepared once you actually retire.
“Preparation isn’t just financial too, I think it’s a mental state as well – in terms of what are people going to do when they fully retire, what are their goals and aspirations? Do they want to travel? Do they want to garden? Do they want to play more golf?”
However, in order to keep actively participating in interests, it’s important to have adequate financial backing to support activities. If people do not plan for their retirement early, then they may find they are unprepared once retirement commences.
“If you don’t have that retirement nest egg when you enter retirement then are you going to end up falling back on the Age Pension which should only be seen as a safety net as it only provides a minimum level of income,” said Mr Lewis.
According to the Westpac ASFA retirement standard, a retired couple will need $56,339 per year in order to live a comfortable life.
Relying for all of your income from the government pension will not provide you with the peace of mind and flexibility that you need in your later years, which highlights the importance of gaining financial advice early to begin planning for your retirement years.
“I’ve been at ipac for 12 years and over that time I’ve seen an awful lot of people come to us for retirement planning maybe two or three years from retirement – and they’re playing catch up at that late stage,” concluded Mr Lewis.
we can help
If you are thinking about planning for your retirement, we can help. Why not get in touch by calling 1800 626 881 or by using the ‘contact us’ tool on our website