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Financial Planning in Your 50s: Your Top Priorities

The older we get, the faster the clock of life seems to tick. If you haven’t planned for your future by your 50s, you could find yourself breaking out in a cold sweat. But fear not, it is never too late to start planning for retirement.

Financial planning in your 50s is a golden opportunity to supercharge your future and build a healthy income for your later years. Read on for the tips you need from our Launceston financial planning team.

What Will Your Retirement Look Like?

If you’re in your 50s, you’re in a dynamic age group. You’re likely to have decades of professional experience behind you and plenty of time for a few more exciting ventures.

As recently as 2020, the Australian Bureau of Statistics (ABS) found that just over half of those over the age of 55 had retired with the average retirement age more or less 55 as well.

The idea of retiring early may fill you with excitement, but those born after 1957 can’t claim the age pension until they’re 67. Therefore, it’s vital to have a retirement plan that will allow you to live comfortably should you choose to retire early.

Creating Opportunities

Even if you decide to work into your 60s, building up a pension pot will open a world of opportunities. You may want to pursue your lifelong dreams or simply seek a comfortable retirement with loved ones.

It’s worth noting your net worth in your 50s should be around four to five times your annual salary. Therefore, before you think of offering to pay off your kids’ student loans or helping them buy a property, check your financial position and make sure you’ll still have savings to cover you in retirement.

If your finances are not as good as they could be, you may want to boost your assets and lower your debts. Here are some tips to help with financial planning in your 50s:

Have a Plan!

Only around a third of Australians say they have a budget. Your 50s are an excellent moment to take stock and have a closer look at your budgeting habits. As well as re-examining your monthly outgoings, you may want to consider how you are paying off debt and check any investment contributions.

Based on your current trajectory, ask yourself if you believe you’ll be able to afford to retire when you’d like to. This can help you create financial goals. At this point, you may want to enlist the help of a financial planner who can help you develop a bespoke retirement plan to help you over the line.

Manage Your Debt

Retiring comfortably is far harder if you have a mountain of debt. This is particularly true if you have non-deductible debt payments that you can’t offset against tax. You should prioritise your debt payments sensibly.

Think carefully about how much you borrow for your children to attend university or start up a business. Burdening yourself with HECS loans or other funding in your 50s may mean your disposable income takes a big hit when you retire.

It’s natural to want to help family members achieve their dreams, but you must ensure any help you offer matches your broader financial goals.

Maximise Your Super Contributions

The Association of Superannuation Funds of Australia (ASFA) reckons single adults need a super balance of almost $595,000 to enjoy a comfortable retirement. For couples, the figure rises to $690,000.

As well as boosting your superannuation contributions, you may also want to increase your spouse’s. This can help build up savings and simultaneously serve as a tax offset. If your spouse earns a low wage or doesn’t work at all and if you contribute to their super, you could be eligible for a tax credit of up to $540 per year.

Review Your Super Investments

Your 50s may be your final opportunity to make effective changes to your super investments before you retire. There are several ways to increase your superannuation balance. You could make additional contributions up to the maximum cap. Talk to your financial planner about how to do this.

You could also try searching for missing super money. Superannuation money can go astray if you change jobs or if a super account becomes inactive, for example.

The missing money gets forwarded to the Australian Tax Office (ATO), which can give you your funds back by moving them into your active super account. You can look for money online by using your myGov account.

You may also qualify for a Transition to Retirement (TTR) pension. This programme lets some people under 65 access up to 10 per cent of their super every year. You could use the cash for expenses or invest it somewhere else if you believe you’ll get a better return.

Consider Downsizing Your Home

Downsizing will reduce your home’s running costs and free up more money for savings. It may also mean you can make a big super contribution. It could be a wise move when financial planning in your 50s.

The ATO lets you contribute up to $300,000 from the sale of a home into your super. However, there are strings attached. You must be over 55, for example, and have owned the home for at least 10 years.

Invest Any Bonuses

As you near the end of your career, it would be a mistake to blow any bonuses on big luxury purchases. You should instead build up your wealth by investing any professional bonuses with the help of PAC Financial.

Although you’re years away from being eligible to join the government Work Bonus programme, you could still create a plan to invest those savings if you decide to take advantage of them later.

Partner with PAC Financial

One of the smartest pieces of advice for financial planning in your 50s is to partner with a financial planner like PAC Financial. They have the skills and experience to help with planning for retirement.

Our Launceston financial planning services are there to support you every step of the way. Contact PAC Financial today and start your journey to a more comfortable retirement.


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