Setting yourself up for retirement in the early years of life

Written on the 7 September 2023 by Parkside InvestorPlus

As you navigate the early years of working life, you may not give any thought or attention to your retirement phase of life.

Afterall, there are so many other priorities such as progressing in your career/job, buying a house, starting a family, attending events involving your kids, planning overseas trips and the like.

However, if you spend some time in those earlier years, typically your 40s and 50s, planning or giving thought to your retirement, you could potentially avoid the ‘retirement blues’ – the period when you enter retirement and feel lost, purposely, and even worse, short of funds to see you through your retirement.

This need not be the case with some planning ahead.

Here are some simple steps to avoid retirement blues.

Long Term Goals

Setting life, financial and personal goals has always been the directive – the problem though is having the discipline and commitment to sticking with your goals.

If you want to achieve certain financial milestones during these years, you should set long-term goals.

This will help ensure your finances stay top of mind and you remain focused on what you’re trying to accomplish.

The specific goals are up to you, but they could include paying off your mortgage or saying goodbye to your auto loans.

If you want to make these goals realistic, create a detailed plan with steps on what you need to do over the relevant period of time.

Think About Setting a Budget

Another simple and achievable goal is to set a budget for your retirement.

If you’re in your 40s or 50s, why not try test drive your retirement.

One way to get started with achieving your financial goals is to set and stick to a budget.

There’s nothing particularly fancy or sophisticated about budgeting, and it doesn’t’ need to be, simply because if you do it right, it works.

Budgeting is to decrease your unnecessary costs so you can save money to put toward your goals.

To get started, collect information about all your monthly income and expenses, or everything coming in and everything going out.

You don’t need to get fancy about tracking your income/expenses – yes you can download apps – however, a simple spreadsheet or even pen and paper with receipts can help you track your costs, you’ll know exactly what you make and spend, and it’ll be easier to identify where you can start cutting any unnecessary expenses.

Start Paying Down or Off High Interest Debt

Naturally when starting off in life, you will incur debt – the key ones being home loan, car loan and possibly even schooling loans.

While it sounds obvious, paying down or even off, any loans you have before retirement will be your best option, simply because if you outright own your home for example, coming into retirement, that’s a huge asset you can leverage, e.g. down sizing and using any left over funds into your retirement.

Start Adding to Your Super

While retirement may be years away, contributing extra into your super at these early stages will reap huge benefits, simply because of compounding.

This is because the earlier you start, the more likely you are to build the funds you need for the type of retirement you want.

Starting your retirement savings early could also help you retire earlier if that’s one of your goals.

By the time you reach your 40s and 50s, you should have already started your retirement fund.

Now is the time to increase your contributions, if possible, because you’re likely making more money than at any other point in your life.

Estate Planning

Finally, don’t forget about setting a up a professional and solid estate plan.

Estate planning may seem like something you can put off until you’re much older, but that’s not the case.

You never know what could happen, which is why it’s best to be prepared for the unexpected.

With the right documents in place, you don’t have to worry about what happens to your estate when you die.

Of course, you should make sure whomever is in charge of your estate, including while you’re alive, is trustworthy and has your best interests in mind.

These documents should also be regularly updated.

There are many more steps you can take in your pre-retirement phase to ensure that you do indeed have a happy, healthy and enjoyable retirement.

If you’d like to find out more or are unsure about how to plan for your retirement, contact Parkside InvestorPlus, (02) 9899 4899.