You might be surprised to learn that Aussies are retiring earlier, with 25% of men retiring before age 55 and 50% retiring between 55 to 64 years. For women, the figures are higher, with 55% stopping work before they reach 55 and 36% retiring between the ages of 55 and 64 years1.
But while these figures sound encouraging, one in three people between the ages of 18 to 64 years still think retirement is too far way to plan for2.
So if your goal is to retire early, how can you put in place a plan and make sure you’ll have enough money to live on?
Here are seven tips to consider:
- Have a clear goal you’re striving for…
- Have a financial roadmap. It’s a good idea to map out things like your financial goals, major payments, health care needs and any government benefits you’ll be able to receive at different stages in your life. Part of the roadmap could be ensuring you have a solid credit rating and looking at how you can cut back on the more ‘optional’ expenses over time so you can wind down work.
- Live modestly. Get serious about living more modestly, to spend less money and save more. Do other things like signing up for DIY courses to fix things yourself instead of paying to have them done.
- Invest wisely. You could generate income through avenues such as rental properties or your own online business. Or downsize to a smaller house and invest the proceeds. Get professional advice first to navigate through the legal, tax or financial issues, including whether it will affect your ability to receive the government Age Pension.
- Manage your debt. The number of people over the age of 65 who are still paying off a mortgage has increased by 54% in recent years3. So consider refinancing or consolidating your debts sooner rather than later to reduce interest, fees and charges. It’s no using trying to save for an early retirement if you still have debt hanging over your head. Find out more about how to pay off your debt.
- A little salary sacrifice goes a long way. The more you can put into your super, the sooner you may be able to retire. By salary sacrificing some of your before-tax income and putting it into your super, you’ll generally only be taxed at 15%, which is lower than most people’s income tax rate. Try our salary sacrifice calculator to find out how much this could make a difference.
- Make your after-tax dollars go the distance. If you make personal after-tax contributions to your super, you could be eligible for a government co-contribution of up to $500 per year4 or your spouse could receive a tax offset by contributing to your super on your behalf.
1 Roy Morgan 6238.0-Retirement and Retirement Intentions, Australia, July 2012 to June 2013
Managing your money
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Preparing for retirement
We’ve put together some information to help you plan for your retirement, transition from work and enjoy living your retirement.