If you have learned to expect a certain standard of living, a retirement before you’re ready could have significant financial implications. So it’s vital to have a plan to deal with this situation.
Many people suffer from a false sense of security. They assume that they have plenty of time to sort out the future, and they won’t need to do anything until it’s too late. Or else they think the worst thing that can happen is the need to move out of their primary residence and downsize. To prepare for an unexpected retirement, you must have a plan.
This article lists essential things to do if you suddenly find yourself in retirement. Read on below to get started.
Assess Your Current Financial Situation
Let’s pretend that you had to stop working today. How is your savings looking? An excellent first step in planning your retirement would be to evaluate your current financial situation and whether or not it will sustain you. You must take into account any assets and government assistance, such as:
- Income from investments (property or shares)
- Eligibility for the Government Age Pension (once you reach 65)
Calculate Your Daily Expenses
Once you know what your income sources will be in retirement, you should calculate your living expenses to estimate how much money you’ll need to spend on the essentials, such as bills, food, home insurance, car repairs, or health expenses.
It can be hard to know how much money you’ll need in retirement to cover your living expenses, so you can use projection calculators to give you an idea of how much money your superannuation account can provide in your retirement, help find ways to increase your contributions, and improve your balance over time.
Know When You Can Access Your Super
Superannuation is always restricted until you reach your preservation age, which is a law set by the government. As of now, the preservation age is between 55 and 60, depending on what year you’re born.
Aside from reaching the preservation age, you must also meet the following requirements:
- Permanently retired
- Intending to retire even if you’re still working
- Have changed jobs on or after turning 60
- Have turned 65 even if you’re still working
Get an Account-Based Pension
If retirement comes too early for you, but you’re already in preservation age, you can take your superannuation and transfer it to a retirement account, particularly an account-based pension. An account-based pension yields the following benefits:
- You will receive income payments from your super (similar to receiving a monthly salary from your employer)
- Extra money for whatever you’ll need
- Money kept in an account-based pension will grow
Work with a Financial Expert
When you meet with a financial expert to discuss retirement needs, they will help you identify goals and assess your risk tolerance. They will also help you develop an appropriate plan to achieve these goals, considering your risk tolerance and timeframe. If you have a robust portfolio, your adviser can consider this and help you determine the best way to effectively utilise your assets and build a solid, sustainable retirement plan.
Prepare for Your Retirement Today!
Unexpectedly retiring is undoubtedly a daunting prospect, but there are ways to save yourself from total financial ruin if you ever find yourself in that situation. Just remember to spend within your means, and you will be fine.
To learn more about tips in managing your finances during your retirement years, check out these posts:
- 3 Tips to Help You Pick the Perfect Financial Adviser
- 3 Benefits of Financial Planning You Should Not Miss Out On
Sydney Wealth Advisers provides top-quality services for retirement planning in Sydney. We understand that planning for retirement is a stressful process, which is why our financial planners will work with you to get the best possible results according to your preferences. Contact us today to learn more!
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.