Hi Susie, I am a big fan of both holidays and retirement planning, so I would plan both. You do not have to give up your lifestyle to plan your retirement, especially if you start in your forties.
Life comes with a set of goals when we are young. These are not everyone’s goals, but most aim to achieve at least some of the goals listed below:
- Life partner
- Own home
As we tick off these goals, there are few life defining goals to replace them. We may like to achieve some of these:
- Higher income
- Own business
But the second five points are a bit nebulous and are not life changing – they are more an improvement in lifestyle than a great achievement. No wonder some people go through a mid-life crisis! By the time we are in our forties we have generally achieved most (if not all) of the big five. Then what?
Retirement planning! Let’s use all the energy we put into achieving those big goals to create an even bigger one: financial independence for life. By that I mean the ability to live the life we want without the need for work. To spend our time travelling, socialising, sailing, golfing; working to improve conditions in Australia or overseas; fundraising, learning another language, craft, hobby or skill; teaching or writing; going to the beach, or the bush, or the outback; walking, running, surfing, going to the gym; riding a pushbike or a motorbike; spending time with the grandchildren, elderly relatives, children or nieces and nephews; helping out at an animal shelter; or a women’s refuge, or a nursing home; learning bridge, table tennis, backgammon or chess; or working but maybe at a slower pace or less frequently, or without pay.
By planning early, there is less of your current income that you need to put aside for your retirement, as the effect of compounding returns will help you to create wealth. You will need to think and talk about what you would like to do in retirement and create a rough budget for what that would cost in today’s dollars. You will then need to obtain professional advice, for two reasons.
You need to ensure that your income will last until you retire, and that if it doesn’t, you can still manage your lifestyle. For this reason, you will need to have your personal insurances up to date, so that if you have some time off work because of sickness or injury, your retirement plans do not go awry.
You will also need to have advice on the amount of money you will need to accumulate to fund your desired lifestyle. A professional financial planner can not only do the analysis and make recommendations on the above two points, but they can also help to keep you on track along the way and make your financial plans flexible enough to cope with the inevitable changes that happen in life between your forties and retirement.
For more information, please contact your financial planner or phone me on 9452 7871.
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