Retire with more- smart strategies to get more from your money.
Retirement means different things to different people so it’s important to identify your goals and find the right solution so you can live the life you want.
How much is enough?
Everyone’s different, so it’s difficult to put an exact figure on how much you think you’ll need for retirement. Some questions to think about include:
· What age do you plan to retire?
· What sort of lifestyle do you want?
· Have you paid off all your debts?
· Will you need extra money for other needs such as holidays or a new car?
In Australia, as we’re living longer it’s important to plan for the longer term and to make sure you have enough to live the life you want.
As a general rule of thumb is you need about 60% of your final pre-retirement salary for what could amount to 20 years or more.
Here’s some options to consider before retirement.
Investing outside super
Investing in assets such as property and shares is a good way to build wealth for your retirement. To make sure you’re investing tax effectively, it’s worth considering a strategy such as gearing.
Suitable for those with their mortgage under control, this strategy involves borrowing against the equity in your home to invest in assets such as shares. The advantage is it can allow you to make a larger investment than if you relied exclusively on your own capital and the interest(and certain other costs) are generally tax deductible.
Investing in super
Super is one of the best ways to save for your retirement because of its favourable tax treatment.
Super earnings are generally taxed at a maximum rate of 15%, which means your money can grow faster than other investments that are taxed at a higher tax rate. Also, when you’re 60 or over, all your super sitting in a taxed super fund will generally be tax free.
A good first step to boost your super is to find any lost super you may have and consider consolidating multiple funds into one account. This makes it easier to keep track of your money and helps you avoid paying multiple administrative costs.
Another way to boost your retirement nest egg is to arrange for some of your pay or bonus to be paid into your super fund before tax is deducted.
Know as salary sacrifice, these contributions are taxed at a maximum rate of 15%, meaning a potential tax savings of up to 31.5%
Transition to retirement
Another option to consider if you’re 55 or over and are still working is a transition to retirement strategy, which may allow you to build a bigger retirement nest egg without reducing your current income.
Here’s how it works:
· You contribute part of your pre-tax salary directly into your super fund.
· You transfer some of your existing super into a Transition to Retirement Pension (TRP), which is an investment that allows to you withdraw money from super, and
· You use the regular payments to replace the salary you’ve contributed into super.
The wealth managers at Bradbury Wealth can help you work out how much you’ll realistically need to live on in retirement and how to achieve it. They can also help you with pre-retirement strategies to help reach your retirement goals sooner.