03 - February

Get On Top Of Your Finances In Your 50s

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When you’re in your 50s life is a complete change from your earlier years. You may have already paid off your mortgage and have even more spare cash now that the kids have moved out and aren’t as dependent on you. Your career has had long enough to evolve to what you want it to be, both from a financial and rewards point of view. So what is the next step for you and your finances?

There are a couple of aspects that you’ll want to consider at this time of your life. Retirement is not a long way off, so it’s time to decide how you want to spend those years and how you’re going to plan for them.

Be In Charge Of Your Lifestyle

Many of us have to lead a reactionary lifestyle for most of our working lives. We have to work hard to afford mortgage payments, plan for our partner staying at home with a young family, and react to work pressures which the ups and downs of the economy invariably throw at us.

In your 50s it’s likely that you’ve got a little more financial freedom than you had in your youth, so you and your family can plan for your future. What do you want out of life now? Are you happy in your new home or would you like to move to a new one? Would downsizing improve your position and your finances? There are many different options available to you, so once you know exactly what your financial situation is you can start making your dreams come true!

How Much Money Do You Have Available To You?

Once you have an idea of which track you want to take, you will need to set up the necessary plans to achieve your goals. Firstly, look at these financial aspects so that you’re ware of exactly what money will be available to you.

  • Superannuation – Is your super invested in the most effective way? Look at adding more contributions now that you have more spare cash, and speak to a professional regarding your super fund’s investments. Remember, you can change your investment options at any time, so ensure that they aren’t outdated or in a poorly-performing investment.
  • Other investments – It’s likely that you’ve invested elsewhere throughout the years, through managed accounts, shares and real estate. Ensure that your portfolio is up to date and that your money is invested wisely. Again, speak to a professional to see if there are any better options for your investments. You may also decide that this is the best time to sell your real estate, if you get a good return on it, so that you can benefit from a lump sum to boost your financial freedom.
  • Insurance – Which insurances do you have? Is your life and income insurance at the most appropriate level for your circumstances? Many older people fall into the trap of having too high a level of insurance for their circumstances. Check your policy and update or change it if necessary. Ensure that your family is covered financially should the worst happen so that you can look forward to your retirement with the peace of mind knowing that you’ve done the best for them.
  • Day-to-day spending – It’s important to regularly check your pending, regardless of your age. Now that you’re looking forward to your retirement this is even more important. Look at any things that you’re spending extra money on that you don’t necessarily need so that you can focus on buying the things you want.

Planning For Your Retirement

Once you’ve looked closely at your finances, you may find that you haven’t got as big a nest egg as you thought. There’s no need to panic – many people find themselves in this situation, and it’s never too late to make amends. There are several things you can do to boost your savings.

At this time of your life you’re probably earning more than you have at any other time. Use this extra money to add to your super fund or put some money away in a term deposit. This is an ideal way of getting extra interest on your cash, as a term deposit (or TD) is low-risk, and you simply leave a lump sum in the bank for a fixed amount of time with a fixed interest rate.

Pre-retirees are also eligible for assistance from the government in the form of a Transition to Retirement strategy, or a TTR. This is available to the over 55s, and allows you to withdraw some of your pension while you’re still in employment. There is also a salary-sacrificing scheme in place, in which any contributions up to $35,000 are taxed at just 15%. To find out more about these, visit the Australian Taxation Office’s website, www.ato.gov.au.

Although most people in their 50s find that they are earning more money than they have done before, everyone’s circumstances are different and there are many who still struggle financially leading up to their retirement years. If you’re one of these people, there are schemes available which can help you to boost your finances. For example, if you’re on a low- to middle-level wage you may be eligible to receive a co-contribution from the government for your super. This scheme means that, for every $1.00 you contribute to your super (up to $500), the government will contribute $0.50.

You’re Not Alone

Everyone in their 50s needs to look forward to their retirement years, whether they’ve got grand plans (such as that vacation you’ve had your heart set on for years) or they’re just looking forward to relaxing and enjoying more time with their friends and family. Take the time to speak to people who are in the same situation as you, and see how they’ve planned for their retirement. They may have had some good ideas that you haven’t considered.

Also, there is plenty of professional help available. You may wish to speak to solicitors, tax professionals or financial advisors to see what the best options are for you. Whatever you decide to do, getting your finances in check before you retire will allow you to enjoy the time and money that you’ve worked so hard to earn.

For financial advice tailored towards your personal situation, please call TGFS Financial Planning today on 1300 755 521 or email trent@tgfsfinancialplanning.com.au

TGFS Financial Planning is an Authorised Representative of Consultum Financial Advisers Pty Ltd. ABN 65 006 373 995 AFSL No 230323 (Consultum).

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.

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