When you have only five years before you reach retirement, you are more careful about the financial decisions you make. After all, the decisions you make now will dictate what your future will be like.
To effectively plan for your retirement, your trusted financial planner on the Gold Coast shares some crucial decisions you need to master for your future:
Know How Much You Need for Retirement
Before deciding where to invest, you first need to know how much money you need to retire comfortably. To calculate the amount, multiply your annual gross salary by 25. Then, add 10% of your earnings to the total.
You don’t need to include your employer’s contribution, government disability, or social security benefits. You need to consider that your retirement fund should cover all your living expenses, including your medical bills and travel allowance.
Carefully Study Your Asset Allocation and the Associated Fees
How you allocate your money among different assets is essential for your retirement planning. Financial planners say that allocation and the management fee you pay can significantly affect your investment return.
It is good to check your portfolio regularly. How often you check it will depend on your state of mind. If you are doing well and your portfolio is growing, you don’t need to check it daily. On the other hand, if your portfolio is unstable and you are doing poorly, you may need to check it every day. The exercise aims not to check the movement of the market but rather to check your allocation and management fees associated with the assets.
Come Up with a Year-By-Year Cash Flow Projection
It would be best if you came up with a detailed plan on how you will spend your money when you retire. You don’t need to provide exact details. For example, you don’t need to tell your financial planner how much you will spend on daily expenses. That will make things easier for you. What’s important is that you have a year-by-year projection that shows when you need to start withdrawing from your assets.
Explore the Final Contributions You Can Make to Boost Your Retirement Funds
You can make additional contributions to your super fund through so-called ‘non-concessional contributions.’ These are after-tax contributions that may make you able to retire with more considerable capital. The ‘non-concessional’ term means that you’re not allowed to claim a tax deduction on your contribution amount.
Depending on your age and financial situation, you can contribute up to a certain amount. To come up with the amount, you’ll need to use the Lifetime Capital Gains Tax exemption, which is the amount of gains that you can make without having to pay tax.
To avail of the scheme, you need to notify your super fund. Once your fund receives your request, it will be counted as a non-concessional contribution.
Conclusion
If you have only five years before you retire, come up with a detailed plan on how you will handle your finances. Ensure that you have your asset allocation right. With a good asset allocation, you can ensure that the money you have will last you for the rest of your life. Make sure that you have the right mix of investments to keep your finances viable. It’s also a good idea to get the help of one of the best financial advisors in your area to guide you.
New Wave Financial Planning offers you the expertise of a seasoned financial planner on the Gold Coast so you can make sound decisions for your retirement. Contact us today to set an appointment with our financial planner!
