How to improve your financial wellbeing as you plan for retirement

It’s no secret that like many other developed countries, Australia is ageing – one in six of us is now aged over 651 with more than four million baby boomers2 approaching or considering retirement right now.

The baby boomer generation has worked and saved hard over many years, but hikes in the cost of housing, food, electricity, healthcare and taxes over the past decade have increased the amount they are likely to need for a modest or comfortable retirement3. If you’re part of this generation, have you considered how much money you’ll need for your retirement and what strategies you’ll use to get there?

A solid personal financial plan is a good place to start

While everyone’s goal for retirement is different depending on their personal circumstances and lifestyle, a good plan today can help lay the foundation for improving your wellbeing now and into retirement. But not everyone knows how all the pieces of their financial life fit together, particularly as things change and you need to rethink your plans. As Walt Disney—a man who went from bankruptcy to a cherished household name around the world—once said, “times and conditions change so rapidly that we must keep our aim constantly focused on the future.”

For example, do you understand what implications the recent changes to super rules will have on your nest egg? Is your income suffering from low interest rates and volatile investment markets? And have you considered how longer-term issues like health and mortality, risk of financial abuse, and cost of aged care services could impact your financial future?

If you haven’t planned ahead for these questions (and so many others), you’re not alone.

Are you one of the three in five Aussies without a financial plan (or with merely a loose one)?4

If you haven’t quite developed a proper financial plan, that’s OK. It’s not too late to make the change and address all those questions. Consider these steps as you work towards developing a plan and improving your financial wellbeing.

  1. Identify your retirement goals and ensure they’re realistic
    Want that trip to Tahiti? Let’s face it, a lot of people spend more time planning holidays than planning for retirement because it’s more fun and attainable. But it’s important to realise that many of your goals, such as actually saving for retirement or paying down the mortgage do not happen overnight (unless you win Lotto). They’re achieved through planning and setting timelines. By understanding what retirement means to you (and identifying other goals along the way), you have something to work towards, and importantly, figure out what’s achievable in the timeframe you have.
  2. Review your spending habits
    This is more than just totalling the sum of those daily coffees (although it can be a whopper); it’s about negotiating better deals, reducing fees and interest costs, and making your money work harder. Budgeting is a balancing act where you manage your expenses to the point where you have enough left over for tomorrow’s needs. Reviewing your current cash flow, looking at ways to build a nest egg, and paying down debt while also considering investing can all be part of a well-structured financial plan. Through this process, you may also discover potentially more effective tax planning strategies that can save you money. You may find that there are more effective ways to manage your super through strategies like making non-concessional contributions (if eligible), equalising balances with your partner, or in other ways altogether.
  3. Understand potential risks and protect your assets
    Have you considered what will happen if you become injured or incapacitated? Do you have a succession plan, a will or personal estate plan? Do you understand how to invest or retire in this current low interest rate environment or are you just unsure about what you need help with? These are all things that should be included in a financial plan. For SMSF trustees, talking to an advisor at a firm like Dixon Advisory that can support your SMSF in line with your plan can make all the difference. You retain control but have access to specialists in all those complex areas like estate planning, strategic financial advice and accounting, and we can take care of all the paperwork too.

Financial wellbeing is living, planning and managing today responsibly for tomorrow

Taking care of your personal financial wellbeing can be as important to your overall wellbeing as a roof over your head, nurturing social connections and maintaining physical and mental health. While approaching your finances in this way can be complex and understandably, a little daunting, just like getting a personal trainer to help you get fit, a good advisor can help you identify the key issues and work out how best to address them.

Ultimately, getting good advice can help you gain more financial confidence. While it may not happen overnight, the right approach and partnering with a trusted professional can be the key to putting your financial wellbeing securely in your hands.

This insight may contain general financial advice and was prepared without taking into account your objectives, financial situation or needs. Before acting on any advice, you should consider whether the advice is appropriate to you. Seeking professional personal advice is always highly recommended. Any forward looking statements are based on current expectations at the time of writing. No assurance can be given that such expectations will prove to be correct.

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Dixon Advisory

Dixon Advisory is a privately owned financial advice firm supporting over 8,000 Australian trustees to optimise their wealth for retirement through self managed super funds (SMSFs).

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