Retirement is a crucial aspect of life that many of us busy Sydney people are looking forward to! We often dream of the days when we don’t need to deal with the hassle of work and can just relax on a beach. But unfortunately, for hundreds of thousands of Sydney retirees, the idea of comfortable retirement can be just that – a dream.
From a financial perspective, ensuring that your retirement life will be hassle-free requires an extensive investment in time and planning in the years beforehand while you are still working. And even if you have a retirement plan already in place, regular reviews are necessary to adapt according to unforeseen changes in pension rules, tax law, and your own personal circumstances.
Why do we need to plan for our retirement in the first place? Can we just pack all our things and head to the beach the moment we hit 65? This may seem an intuitive phase in life, but many fail to plan ahead. No one knows what the future will bring, but we do know you are much more likely to be in a better position if you have a retirement plan.
Below are the top reasons why Sydney people need a retirement plan in place as early as possible.
1. Pension Benefits in Australia are uncertain
First off, we should all face the reality about the prospects of government-subsidised retirement. As you might have already heard in the news recently, the population in Australia continues to age. With medical breakthroughs, more people in developed countries like Australia are now enjoying longer lives. While this is great news, it is not-so for the government social security system. With more dependents and less contributors, the pension system may not be capable enough to support your comfortable retirement.
In fact, according to the report published by Industry Super Australia in 2015, about 50% of retiring people in the next four decades may not have enough money for their retirement. With this data in place, it will be to your advantage if you have a sound plan to beat the probability of hitting the retirement age with less money in your pocket
2. Unexpected Medical Expenses
Planning your retirement to depend on a sole source of money over which you have no control (the age pension) is arguably very risky. The Australian age pension is declining in real terms, and it’s now impossible to enjoy a comfortable retirement by relying on it – certainly in Sydney where the cost of living is high. At most, the government pension will only provide you with a minimum safety net – a basic standard of living, which may not cover unexpected expenses such as medical bills.
Working for years can take its toll on your body. And no matter what you do, your health will gradually wane in old age – medical problems are virtually unavoidable. So it’s important you have the ability to fund increased expenses on healthcare.
Without a retirement plan, living on your retirement while facing medical problems can be a huge burden to you and your family. Serious medical conditions such as cancer, cardiovascular diseases, diabetes, and other critical illnesses can easily wipe out your retirement savings. One good way to protect you from such unfortunate events is to get the right kind of insurance, which can be a vital component of your retirement plan.
3. Estate Planning
Finally, let’s take a break from the negativity of the pension system and the health issues associated with old age. Let’s discuss your family. Setting up a comprehensive retirement plan can help your spouse to also live a comfortable retirement, send your children or grandchildren to university, or passing on your wealth to your loved ones.
Without a sound retirement plan, you may need to sell your assets such as your home or car so you can have enough money to finance your aged care. This may prevent you from passing on a wealthy life to your family, or even worse, you can even become a financial burden to them in the future.
Consult a Sydney Financial Advisor to Start Planning Your Retirement Today
Retirement planning is not really a ‘DIY task’. The process can be very complicated, and the rules are always changing. Unless you have a solid financial background yourself, you may need help to understand the intricacies of setting up your nest egg.
Consulting a Sydney financial advisor will provide you with a well-drafted plan that helps achieve your financial goals and ensure that you will experience the wonderful retirement you deserve.
Call Focused Financial Advice on 02 9003 0611 for your retirement planning needs.