When would you like to retire?

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When would you like to retire?

By Dominic Stefanatos

Most of us probably don’t think about retirement until we’re in our late 40’s or 50’s. Let’s face it, before then it seems like a long way off, somewhere in the distant future.

Suddenly though, we’re in our early to mid 50’s and it doesn’t seem that far off anymore, maybe only 10 or 12 more years down the track. And it’s often about then, that we start to think about what life will be like after work. Whether you’re retiring from a job or perhaps you’re self-employed or own your own business, we all want (or need) to retire at some point in time.

But, how ready are we? Do we have enough money to last us for the rest of our lives? And how long is that going to be anyway?? For most of us (including myself), we couldn’t actually answer that question with any certainty. So, unless you’re already a multi-millionaire, chances are you may be worried or even stressed about the prospect of not having enough money to survive in retirement, as I was.

Here are some figures on what the average balance for both men and women (in Australia) should look like within each age bracket according to the ASFA.

Age       Average balance – men       Average balance – women
20-24     $5,924                            $5,022
25-29     $23,712                          $19,107
30-34     $43,583                          $33,748
35-39     $64,590                          $48,874
40-44     $99,959                          $61,922
45-49     $145,076                        $87,543
50-54     $172,126                        $99,520
55-59     $237,022                        $123,642
60-64     $270,710                        $157,049

Source: Association of Superannuation Funds of Australia, Superannuation account balances by age and gender 2015-16

(Click the link above for access to more facts and figures from the ASFA website including their retirement standards report

                             

Will your super be enough to retire on?

Even if your balance is above most others at your age, will it be enough for a comfortable retirement?

The Association of Superannuation Funds of Australia (ASFA) notes that “many people will still retire with inadequate superannuation savings to fund the lifestyle they want in retirement”, and that “most people retiring in the next few years will rely partially or substantially on the Age Pension for some or all of their retirement”, again due to “inadequate super savings”

So, where are you positioned? For many of us, it’s outside of where we need to be to retire adequately, let alone comfortably, and that’s what scared me the most. It was plainly obvious to me that I wouldn’t have anywhere near enough money to retire on, which in turn meant I would probably have to keep on working past retirement age.

That was not an option for me! And that’s when I was forced to consider some alternatives (which I will share in a moment)

So what next?

Well, a lot will depend on your age and current circumstances, but there are definitely a number of options and strategies available to you. You will need to talk to a good financial planner about what’s going work best for you. They will need to evaluate things like your current financial position, taking into account your age, your current super holdings, and your income potential and assets, etc. They should also be able to help with advice on things like

  1. Salary sacrifice and extra contributions

  2. Finding lost super you may have forgotten about

  3. Superfund consolidation to minimize fees

  4. Insurance options

  5. The importance of a legal and binding will

  6. Taxation strategies

  7. Superfund investment options

  8. Alternative investment option

  9. Savings strategies

  10. Budgeting and planning

  11. Alternative income streams

Alternative income streams?

Your pot of gold

Another way of securing your financial future (no matter what your age is now) would be to think about ways of creating a passive income.

What is a passive income?

A passive income is money you earn multiple times over for setting up something once, with little time or maintenance required to keep it running. In other words, you stop trading your time for money.

Examples of this would be, a rental income from property, royalties from a book or trademark, dividends through a share portfolio, affiliate marketing or online business.

The latter two are my personal favourites for a number of reasons

  • They cost a fraction of the price to set up and maintain. You don’t have the on-going cost of staff,

  • rent, and utilities that are generally associated with a traditional business.

  • Your business can be managed from anywhere in the world at any time of the day or night.

  • There are no limits on when you can do business. 

  • There are no limits on the number of products or services you can provide.

  • It takes a fraction of your time to manage compared to a regular storefront business.

  • They are Highly Scaleable! Which has the potential for massive income.

  • They give you an uncapped Passive Income Potential

  • They have the potential for Multiple Income Streams. 

Again, I would suggest talking to a financial planner or a good accountant if you think that this is something that could help you now or in the future. However, I would also suggest looking into it a little further before you talk to them so that you have a clear idea of what you want and how it all works.

If you would like more information about alternative income possibilities and what I have set up for myself, please click here. You will then have access to other pages that can explain how this all works in much more detail.

Thank you for reading this far, and I hope to see you on the other side.

How to make your first 10K online!

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