Worried you haven’t saved enough for retirement? Perhaps you’ve spent years raising a family, paying off a mortgage or simply getting through the weekly bills. Retirement planning may have taken a back seat.
The good news is that you haven’t necessarily missed your opportunity. Whether retirement is decades away or getting closer, understanding where you stand is a useful place to start.
Here are some things to think about if you feel you need to catch up.
- Find out what you already have
Before you start worrying about how much you haven’t saved, take stock of what you do have.
Superannuation is likely to be an important part of your retirement income. But do you know how much super you have? Have you changed jobs over the years and lost track of an old account? Do you understand the fees, investment options and insurance attached to your super?
Your super is only one part of the picture, too. Savings, investments and the equity in your home may also play a role in your longer-term financial position.
Knowing where you stand gives you a starting point for working out what the gap might be.
- Think about the retirement you want
There’s no magic number for retiring comfortably. The amount you’ll need depends on the lifestyle you hope to enjoy.
Do you picture travelling, spending more time with family or enjoying hobbies? Or would you prefer a quieter lifestyle closer to home?
Your everyday expenses will still matter, even when you’re no longer working. Housing, food, transport, utilities, health costs and leisure activities can all affect how much income you may need.
It’s also worth remembering that retirement can last for many years. Planning isn’t just about having enough to stop working, it’s about how your money might support you throughout retirement.
- Make room for saving
Finding extra money to put towards retirement can feel difficult when household expenses are already stretching the budget.
But a closer look at your cash flow may reveal opportunities you hadn’t noticed. Subscriptions you rarely use, frequent takeaway meals or other regular expenses can add up over time.
That doesn’t mean you need to give up every little pleasure. It’s about understanding where your money goes and whether your spending reflects what matters most to you.
If additional income becomes available through a pay rise, extra work or a change in circumstances, that may also create room to build your retirement savings.
- Don’t overlook debt
Debt can affect how much money you have available both before and during retirement.
Credit cards and personal loans can carry interest costs that make it harder to build savings. A mortgage may also continue into retirement, depending on how long it takes to repay.
Understanding how much you owe, the interest you’re paying, and how much time you have left on your loans can help you see how debt fits into the bigger picture.
Your home may be a valuable asset, but it isn’t the same as having cash available to pay everyday bills. Consider how housing costs and home equity fit into retirement as part of your overall plan.
- Remember, time isn’t the only factor
Starting earlier gives savings more time to grow, but that doesn’t mean it’s too late to start.
Your circumstances, income, existing super, debts and retirement timeframe all influence what may be possible. Small changes can make a difference, but it is important to keep expectations realistic rather than assume you can make up every shortfall overnight.
You may also have options for when you finish work, whether you reduce your hours gradually, and how you draw on different income sources in retirement.
Start with a clearer picture
Retirement planning can feel overwhelming when you think about everything at once. Breaking it down into what you have, what you may need and what could affect your future income can make it easier to understand.
You don’t need all the answers today. The important thing is to start asking the questions.
If you’re concerned about whether you’re on track, speak with your financial adviser. They can help you understand your retirement position and the options that may be relevant to your circumstances.