How to Start Retirement Planning at 40

Something happens when you turn 40. Suddenly, retirement seems much closer than it did just a few months ago. It feels like it’s time to get serious, and it is. Most 40-year-olds have started saving for retirement, but many don’t know exactly how much they’ve saved or how much they’ll need at retirement. 

If you’ve been working, you have your super fund, and this is a great start. But as any Australian retiree will tell you, you’ll be much better off if you have a strategic, well-thought-out retirement plan than you will if you just coast along sending the employer-mandated amount to your super each month. 

What should you do if you’re just starting your retirement planning at age 40? We’ve put together a handy list for you.

 

1. Get Your Bearings

If you’re 40 years old, you’re probably at peak performance in your career. You may have been working long enough to have accumulated significant assets, and you might have a good idea of what you want your retirement to look like. 

Make a list of all your assets. Don’t forget to include superannuation accounts from previous employers. List your real estate, investment accounts, and any other assets you hold.

Next, list your liabilities: mortgages, consumer debt, business loans, etc. Once you have a complete list of your assets and liabilities, you’re in a good position to start working on a retirement plan.

 

2. Create a Retirement Plan

Before you take steps to start salary sacrificing or investing in other ways, it’s important that you have a target goal. If you don’t know how much money you need to save for retirement, you won’t know how much to save.

With your lists of assets and liabilities, you know where you stand now. Next, you need to know how much you’ll need to save for retirement. A Wealth Management adviser can help you to know how much you’ll need in order to live the kind of lifestyle you’re hoping for. With this target number, you can create a plan to systematically save enough money to fill in the gap between your current retirement savings and your target goal.

 

3. Make Adjustments

For most people, you’ll need to make some adjustments to your lifestyle in order to make your plan work. You may need to start salary sacrificing to make up for lost time. You may need to create a budget to help you control your spending so there’s room in your monthly finances for sending more of your income to your super fund. It’s easier to make these “sacrifices” if you look at it this way: It’s not a matter of whether you spend money or not. It’s a matter of deciding to spend it now or spend it later. In the end, you’ll be glad you waited to spend it later. Not only will it provide you with peace of mind and security, but your money will have time to grow into more than it’s worth today. 

At age 40, you still have decades of productivity in front of you. In fact, truth be told, your most productive years are still ahead. If you have procrastinated your retirement planning, it’s not too late. But don’t wait much longer. The longer you put it off, the tougher it will be to catch up. Reach out to us at Altus Financial; we can help you to create a retirement plan that will help you to achieve your goals.