What Are The Six Essential Steps You Need To Take Before You Retire?

As retirement beckons, careful planning and preparation become paramount to ensure a fulfilling and financially secure future.

Retirement is not just a few weeks of leisure; it is a new chapter in life that can last for decades.

Here we will explore essential steps to take before you retire, helping you build a clear vision of your post-retirement life and ensure that you have the financial means to enjoy it to the fullest and embrace retirement with confidence.

Whether you aspire to travel the world, indulge in hobbies, or simply relish quality time with loved ones, taking these proactive measures will lay the foundation for a rewarding and worry-free retirement journey.

What are the six steps you need to take when planning your retirement?

1. Envision what your retirement looks like

Build a picture of what you would like to do in retirement. Start thinking about what you will do to lead a healthy and active lifestyle and how you will use your free time to do what you enjoy most. Have an ongoing plan, remember retirement is for the rest of your life, not only a couple of weeks, so have a plan that can be adapted as you progress through.

2. Forecast your future retirement spending

From this, start to develop a sense of what your retirement spending will be, consider ongoing everyday living, plus splurges along the way eg travel, hobbies, luxuries or family handouts you may have in mind.

3. Get a comprehensive understanding of your assets and liabilities

Gain an understanding of your assets and liabilities and determine what can generate a return, what can you live off, at what age can you access your super, what is taxed, and can it be positioned more efficiently? There are windows of opportunity to contribute more to superannuation which can make a positive difference to retirement income.

4. Extinguish any debt

More than half of people aged 55+ have an outstanding mortgage in Australia and having debt in retirement can impact you financially and emotionally, so it is time to get rid of your debt. Working for longer may be the right approach for a more comfortable retirement.

5. Leverage tax effective strategies

Consider tax smart strategies now, while tax rules and rates are likely to change there are ways to set yourself up for a potentially better tax outcome. Understanding what your tax rate in retirement is likely to be, and how to structure your finances to minimise tax can be a smart move to make today, and one that you will benefit from for the duration of retirement.

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6. Obtain financial advice

Seek financial advice, be specific about what you would like advice on. Advisers can help structure your finances so they last longer, are less exposed to risky investments or increase one’s Centrelink entitlements. Importantly, financial advice can provide useful insights, for example inform you of whether you are on track for the retirement you want.

Pre-retirement financial advice is key

Financial advice before retirement can be one of the most impactful of all stages in life. It can provide peace of mind for clients as to how their retirement will look and feel based on how their assets will support and pay for their retirement. There can be jargon or concepts to understand so starting the advice process in advance of retirement will give you time to understand more before making what can be big decisions along the way.

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