Retirement is one of the major lifetime events. Like lots of important events, proper planning is an important key to success. Finance is not the only area, but no doubt it is an important one.
So what should you do to prepare your finances for life after retirement? Here are 5 things to get you started.
1. PAY OFF DEBTS BEFORE YOU RETIRE.
Having to service a mortgage or other debts will be a big drain on your finances, and soak up money that could otherwise be used on things that you enjoy. Also, you are now reliant own your own savings, and you have limited ability to recover from financial setbacks.
2. DO A BUDGET.
Rather than drudgery, budgeting is informative and empowering. If you don’t have a good idea of your expenses, it will be impossible to manage your cashflow. Also, the process of doing a budget will help you identify and remove any unnecessary expenditures that have snuck into your life.
3. COMPLETE ANY HOUSEHOLD RENOVATIONS, OR OTHER BIG EXPENSES BEFORE YOU RETIRE.
If you can’t manage this, make sure you have funds specifically put aside and earmarked for this. You don’t want to be pulling down on your retirement nest egg which is there to fund lifestyle.
4. MINIMISE TAX, MAXIMISE AGE PENSION OR OTHER ENTITLEMENTS.
This may seem self evident, but it doesn’t happen without a bit of planning. How you organise yourself can have an important influence on how much age pension you get. As to tax, the account based pension is very effective.
5. INVEST MONEY ACROSS DIFFERENT TIME HORIZONS.
Whether contained within an account based pension or otherwise, it is important to have short term investments to meet short term needs, medium term investments for medium term needs, and longer term investments to meet longer term needs, all at risk levels that meet you feel comfortable with.
