A life stage guide to retiring
In the early years of working life, retirement can seem too far away to be a priority. We talked to certified financial planner Stevie-Jade Turner, about how she helps clients get their finances in shape for a better future at every life stage leading up to retirement.
In your 20s: Stick to a budget
While this may be a time when you’re at the bottom of the career ladder and not earning a big salary, it’s good to get in the habit of saving for your goals. And if you find it hard to resist the urge to borrow to supplement your income, Stevie-Jade says it’s the perfect time to start honing your financial skills. “Budgeting is a skill you need to master from the get-go,” she says. “A lot of people think of a budget as something that limits you. I always tell my clients that budgeting is actually a way to have control over your money and more financial freedom as a result. It’s your chance to decide just where you want your money to go. If you can manage to track your spending and set yourself a target of saving 10 or 15% of your income, you’ll soon be in a position to make choices about what to do with that money.”
In your 30s: Plan and prioritise to minimise debt
While it can be tempting to ignore retirement goals when you’re in the midst of buying a home and raising kids, Stevie-Jade has a way of reframing retirement so it feels more relevant for younger adults. “To start taking retirement savings seriously, you need to start thinking about financial independence rather than retirement,” says Stevie-Jade. “It’s an important shift in your mindset and can help you see all your money – including superannuation – as an opportunity to build wealth and a more stable financial future, instead of spending it all now.”
In your 30s it can feel like you’re just working to keep paying bills. You can easily be tempted into debt to treat yourself and your family to what you feel you deserve. “That YOLO (You Only Live Once) message can be hard to resist when you want to take kids on holiday or upgrade your car,” says Stevie-Jade.” But I try to help my clients plan and prioritise for these goals and allocate their cash flow accordingly. It’s about deciding on the relative importance of a goal and the right time frame for achieving it. Then you can feel comfortable about your finances and make things happen without digging yourself into a hole with debt.”
In your 40s: Resist lifestyle creep
By the time you reach mid-life you’re likely to be close to your maximum earning potential. You could still have some larger financial commitments – like your mortgage for example – but this isn’t the biggest threat to your plans for financial independence. “Lifestyle creep is the real problem here,” says Stevie-Jade. “In your 40s you have the potential to really supercharge your wealth but only if you can resist the urge to have everything you want immediately. It comes back to the same skills and mindset – budgeting, planning and prioritising so you can enjoy life now, but without sacrificing your chance to save, invest and earn compounding returns.”
In your 50s: Maximise your super
If you’ve reached your 50s and don’t have a six-figure super balance, you’ll definitely need to commit to a strict budget to get back on track. “In offering strategies for financial goals and wellbeing, I’ll usually suggest a series of small changes so clients can adjust to each step before taking the next,” says Stevie-Jade. “But when you do income projections based on a low super balance in your 50s, the outlook for retirement isn’t great. So I’d definitely recommend a big commitment to super at this stage, contributing right up to your concessional cap and even making non-concessional contributions.”
Another choice many people face in the home stretch before retirement is whether to give adult children a helping hand with their finances. While parents naturally want the best for their kids, offering money towards a house deposit or HECs debts could undermine their own plans to retire in comfort. In situations like this, Stevie-Jade suggests that professional advice can offer a valuable perspective. “I want my clients to get what they want,” she says. “But I also want it to be comfortable and easy for them. If they’re looking at new financial commitments that can take them off course, I’m there to give them an objective view of their options. These conversations can be a sense check, allowing them to balance the emotional side of their situation with their practical needs.”
If you need assistance getting on track for retirement, get in contact with the Coastline team. We’re here to help.