Are you dreaming of an early retirement? If you want to make this a reality, you need to consider comprehensive financial planning for your retirement.
You need the best retirement plans, backed by competent financial advisors, to determine whether you are ready to stop working early and maximise your passive income avenues.
Here are three questions you should ask yourself as you plan for an early retirement.
1. When Will I Want to Retire?
Retirement is a choice and a journey.
Sometimes, we have no control over when and how we retire because of health, financial, or even family factors no one can predict or expect.
Consider when your ideal retirement age would be and build your plan towards that.
If you are planning to retire earlier than the standard retirement age (65 years of age), you may like to consider seeking sound retirement advice from reputable financial advisors to ensure that your financial goals are achievable, specific, and measurable.
At EJM, our aim is to help you reach your retirement dreams. Our dedicated and experienced financial planners can help you have peace of mind that you will be secure in retirement.
2. How Much Money Will I Need?
Working with so many pre-retirees, they want to know one thing: the dollar difference between how much money they have right now and how much money they will need for retirement.
The earlier you determine this difference, the easier your financial choices will be and you can then make smart, informed decisions for your retirement.
The Association of Superannuation Funds of Australia (ASFA) estimates the real dollar number amount you may need for a comfortable post-retirement lifestyle:
- $44,412 a year for a single person
- $62,828 a year for couples
While these figures are a good starting point, your lifestyle and spending average may not fall within this “average”. When thinking about your retirement plans, you should always think of your own budget and lifestyle requirements.
You need a realistic working budget as you may overexert yourself by working for extended periods or change your working hours based on a budget that isn’t right for you. Here are two steps you can take to determine your personal, realistic budget:
- Look over your previous expenditures – calculate the amount of money you have spent over the last 12 months to determine how much more you will need to save for your ideal retirement. Consider areas where you can reduce unnecessary spending and put more into your retirement fund.
- Consider how to invest your savings – investing can be exciting, but it can also be a dangerous game. High investment generally means higher risk, and vice versa. Ensure you invest within your comfortable range, and don’t forget to diversify your investments to protect your savings.
3. How Can I Boost My Savings?
You should keep a record of all your assets, such as investments, properties, cash, term deposits, and the value of your superannuation, and then deduct the loans and debts you have to pay off.
If you’re a high-income earner, you may like to voluntarily pay a pre-tax contribution to your superfund or make personal contributions from your after-tax savings.
You may be able to boost your retirement savings by salary sacrificing – this can help minimise tax payments.
With these strategies in mind, think about ways to boost your income once you stop working.
Knowing what steps to take for your dream retirement is essential to achieving financial freedom.
Turning dreams into reality requires careful planning and diligence. You also need to take the time to research and carefully consider the various options available to you.
Make your retirement a relaxing and enjoyable time of your life by being on top of your finances.
If you’re looking for quality financial advice in Melbourne, work with EJM Financial Services.
We provide retirement planning solutions to help you be fully ready when the time comes. Book an introductory consultation with our expert financial planners today!