02 Feb In Your Late 50s or Early 60s? These Financial Planning Tips Are for You
When people reach their 50s and 60s, retirement becomes a reality. As each passing year inches us closer, the scramble to ensure everything is in place intensifies. We often ask ourselves whether we’re ready or if we will have the money we need to survive or handle any unexpected expenses.
It is not uncommon to feel concerned for what may come during our “golden years”. A high number of retirees are no longer earning, so cash flow dramatically changes, which is why it is essential that we take full advantage of our earning years as much as possible.
Lifestyle vs. Survival
Saving for retirement is not just about putting food on the table; it also has a lot to do with the type of lifestyle we would like to live with. After all, you will likely have spent the majority of your life working hard and reporting to a boss by the time you retire. Whatever your job title has been for the past 30-plus years, retirement should be something to look forward to. However, this is unfortunately not the case for many Australians who are approaching their retirement years.
There are a variety of reasons why so many of us feel unprepared for retirement, which often adds more to our stress levels, especially when we are in our late 50s or early 60s. We know that not everyone will retire wealthy and there is nothing wrong with that, but too many of us retire without adequate funds for survival, which means there are little to no funds available for doing some of the things we enjoy.
Some people plan for a certain type of lifestyle and want to live well and possibly do some travelling, or some want to live close to the beach. Our plans for the ultimate retirement lifestyle do not have to be lavish, but we should try and include some of our interests or goals as part of those plans if at all possible so we can actually enjoy our retirement years.
Why Retirement Planning Can Be Difficult
It used to be that retiring in our late 50s or early 60s was more common and actually possible for more people. Today, it is much more challenging for us to conceive of the possibility of retiring before age 65. In recent years, retirement goalposts have been constantly changing for more people due to a couple of reasons.
One of the main reasons our retirement goalposts are often changing is largely due to the fact that our daily expenses and taxes are constantly rising. Other factors may also include any large, unexpected expenses or helping adult children pay for college longer than expected. These are just a couple of examples and there are many other life events that may have had an impact on our ability to save by the time we retire.
Another thing that impacts our ability to save for retirement, therefore forcing us to constantly move our retirement goalpost, is the fact that more people are living longer and healthier lives. Naturally, living longer while in good health is something we want, but any retirement savings we may already have, regardless of how well we’ve planned, may no longer be sufficient enough to see us through our retirement years. This is causing more people to work well into their late 60s or early 70s as more of us expect to live longer.
Start Planning and Tracking No Matter Your Age
If you’re in your late 50s and haven’t saved as much as you had hoped by now, it’s not too late to get yourself on track. The very first thing you need to do is to be honest with yourself about where you’re at today and compare that to where you really want or need to be by the time you retire.
One of the best ways to do this is by creating a spreadsheet and recording the numbers of what you currently have in all of your accounts between investments, super, property, savings, your expenses and your projected expenses. You need to have a clear view of where you’re at today versus where you need to be by your goal retirement age. You may not be 100% sure at this stage of the game so it is best to at least have a projected retirement age.
When looking at what you have versus what you will need, be sure to include any travel, hobbies, or other activities you plan to do each year. Planning to include some of the things you want to enjoy will help make the planning more enjoyable and will help keep you focused. It is easy to plan for our daily needs, but planning for things that actually make us happy will make the planning more worthwhile instead of just making it another task for us to check off our to-do list.
Budget and Cut Down Expenses
If you’re in your late 50s or early 60s and you want to find more ways to add more funds to your retirement accounts, then living within a budget is necessary. You may need to tweak it here and there to help with the savings, which means you may have to go without some of your wants.
We’re not saying lock yourself up inside and never go anywhere – instead, think about daily, monthly, or yearly expenses you could easily start saving on right away. Often, we are paying more for certain services or subscriptions than necessary. When we start looking at our accounts and what payments are going out and analyze our costs, we may find some hidden savings.
Also, think about things you can do at home more often that will help you cut down on paying for those extras. A great example of this is if you buy your coffee at a local coffee shop or even Starbucks – consider buying a reusable to-go coffee mug and brew it at home 3-4 days each week and treat yourself on a Friday. The same goes for lunch. Make extra at dinner and take leftovers 3-4 days each week and reward yourself by going out for lunch with your colleagues on Fridays.
These are just some ideas and maybe you’re already doing them today, but one of the easiest ways to begin saving money right away is by tweaking our lifestyles and daily expenses. Those who follow these methods tend to save more than those who don’t, so changing some of our spending habits today could greatly impact our retirement lifestyle in the future.
Leverage What You’ve Got
Since every financial situation greatly differs from person to person, it is really difficult for us to say what kind of leveraging you could actually do. Some common ways to leverage what you’ve got often includes maximizing every single savings option available to you right now. You can also consider finding a way to use what savings and assets you’ve got today to help create a residual income. Many people want to know how to do this and often ask their financial advisors about the best way to do this.
Many choose to go the investing route, which could turn out great for you but it is not recommended anyone do this without first consulting with a planner or advisor. All too often, we hear stories of people going this route on their own and losing everything or most of what they have worked so hard to save. Learn more about common financial planning mistakes and how to avoid making them.
Are you in your late 50s or early 60s and looking for ways to grow your retirement fund?
If you’re looking for some ways to grow your retirement fund in the few years before retirement, consult with a financial planner to learn more about what options may be available to you. If you’re located on the Sunshine Coast, our wealth specialists here at Ethica Private Wealth are ready to provide you with a free two-hour consult. Call us at (07)5443 5577 or visit our booking page to book your appointment online.