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A guide to retirement.

Published 31 May 2023

A guide to retirement.

The earlier you start your retirement strategies, the easier it will be to reach, and hopefully exceed, your target.

Here are the 10 steps to take if you are 35 years of age and want to retire by the time you are 65:

1. Create a Budget

Creating a budget which lists your current income sources and expenses will give you an idea about how much you would like to live on annually. According to the Association of Superannuation Funds of Australia (ASFA), a couple needs at least $62,828 per year to retire comfortably, while a single person requires $44,146 annually.

2. Superannuation

As well as the contributions your employer pays, you can add to your super by making your own before or after-tax contributions. There are limits (caps) on the amount you can contribute without having to pay additional tax.

If you are a low or middle-income earner and make personal (after-tax) super contributions to your super fund, the government may also make a contribution (called a co-contribution) up to a maximum amount of $500.

3. Have a Cash Reserve

With interest rates rising, it also means higher savings and Term Deposit interest rates. It is wise to have a few months’ of expenses in an account that is easy to access to provide a buffer in the event of a situation such as redundancy or unemployment.

4. Shares and Bonds

Investing in stocks and bonds is a great way to build long-term wealth for retirement. As with any investment strategy, it's important to do your research before investing and speak to a qualified financial planner so you understand how different types of investments work and what risks are involved. Additionally, having a diversified portfolio can help reduce risk by spreading investments across multiple assets classes. Investing for the long term also helps minimise volatility over time.

5. Property

In addition to owning your own home, an investment property has traditionally provided high capital growth. It may also provide a steady income stream and can give you the ability to deduct expenses from your tax. You may also be able to negatively gear your property if its expenses are higher than the rent you receive.

6. Other Investments

Researching different investment options available in Australia, such as business ownership, can also help you with wealth accumulation. A considerable amount of research is required as you need to ensure the relative stability of the company and its management, as well as information that indicates the current financial status of the business.

7. Take Advantage of Government Benefits

There are a range of government assistance programs which could help you save money. These include the Toll Relief Rebate, Family Energy Rebate and Apprentice Registration Rebate. More information specific to your state is available online: ACT, NSW, QLD, VIC, SA, WA, NT, TAS

8. Health Insurance

Getting older can sometimes entail unforeseen medical expenses. Make sure you have adequate health insurance and review your policy annually.

9. Professional Advice

Planning for retirement is a process that requires knowledge and attention to detail. An experienced financial planner will help you consider all relevant and applicable factors, like your retirement goals, average life expectancy, healthcare costs, inflation, government benefits and schemes, returns on investments and tax minimisation.

10. Review and Adjust

Your budget will change over time and legislation around tax, as well as returns on investments, will also change. It’s important to review and adjust your roadmap to retirement to stay on track and take advantage of current initiatives.

By starting your retirement project early, you have the advantage of time. Small investments into assets which can compound, and grow, will ensure you achieve your retirement goals and enjoy your golden years comfortably.