Turning 60 often sharpens your focus on the need to plan for your financial future.
Turning 60 often sharpens your focus on the need to plan for your financial future and how you will fund your retirement. So, what are the age-specific entitlements?
1. Consider your assets
If the Age Pension is part of your plan for retirement income, then it’s worthwhile considering what your assets are worth and whether they will work against you when it comes to applying for an Age Pension. It may be timely to dispose of any surplus assets now and consider gifting to family if you find yourself on the asset limit threshold.
2. Time to remortgage
While it’s becoming more common for Australians in their 60s to still be paying a mortgage, it’s worth considering if you will be able to afford the repayments when you retire. You may wish to consider downsizing, or if you have a long way to go before your mortgage is paid off, it may be worthwhile making extra repayments if you can afford them. You could also reduce the duration of your loan to five, 10 or 15 years, but this will mean being tied to higher repayments.
3. Reduce your debt
Now’s the time to take an overall look at the debt you have and how you can reduce it by the quickest and most cost-effective means. If you struggle with budgets, or don’t really understand compounding interest and annual percentage rates, then a financial counsellor can explain and help you create a debt-reduction plan.
4. Manage your spending
It’s easy to keep paying for the luxury car, premium television channels or expensive grocery items when you’re working, but these are the areas that you’ll need to redress when living on a fixed income. Think about what such things bring to your life and if you don’t need them, get rid of them. This is also a good time to consider your insurance needs. Do you still need as much life insurance? Can you get a better deal on your health insurance? Is your cover right for you?
5. Get the balance right
Working full-time until the day of retirement may be what our parents did, but we do have other options. Yes, life should be lived while you’re fit and healthy, but it has to be funded. Transition-to-retirement arrangements can be made, enabling you to work less, pay more into superannuation and fund the shortfall by drawing a pension. Speak to a qualified, independent financial planner who can offer advice based on your individual circumstances.
6. Get the right advice
Even if you think you’re financially savvy, or don’t think that your retirement nest egg warrants it, you should get qualified, independent financial advice. There are tax minimisation and super maximisation strategies that may give your finances a much-needed boost.