If you are about to retire there are several areas you will need to consider.
Your Current Financial Position
- Assess what assets you own - home, contents, car etc - their market value and their replacement (insurance) value.
- Assess how much your current investments - money in accounts, shares, managed investments, investment property etc - are worth.
- Assess your liabilities - how much you owe.
- Find out what retirement benefits you will receive when you finish work, including the current value of any existing superannuation or rollovers.
Your Lifestyle Aims and Objectives
Consider the things you want to achieve in your retirement and your desired financial situation in 5, 10 or even 20 or more years. If you intend to travel you will need to plan for these expenses.
Once we have assessed your current financial situation we can start to develop a financial plan based on your lifestyle aims and objectives.
Developing Your Plan
Your financial plan should consist of three parts.
Part A - Regular Income
This is the most important part of your financial plan. Estimate how much income you require, taking into account regular expenses such as food, rent, clothing, telephone bills, rates, insurance, electricity, heating as well as mortgage or other debt repayments. Consider using your savings to minimise expenses by paying off or reducing debts. This will effectively reduce the amount of regular income required.
Money used to meet these expenses should come from regular secure sources such as your spouses wage, investments, income stream products or from Government Income Support programs.
There are several income stream products which may be suitable to generate income. For example you may consider using account based income streams . Investments which may also be suitable to generate income include fixed interest investments, term deposits, shares, property or managed investments.
Part B - Cash Reserve
You should keep money for unforeseen expenses easily accessible. The amount of money you require will depend on your circumstances. You are the best person to estimate the amount of money you may need for unexpected expenses.
Part C - Capital Growth
Money left over after providing for living expenses and reserves might be set aside for long term investment. This money should be placed in investments that allow it to grow. It is essential that any investments you make are appropriate for you. The level of acceptable risk, taxation, income support implications and potential to achieve your goals should all be taken into account.
Information courtesy of NICRI