3 Important Rules for Retirement

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retirement

retirement (Photo credit: 401(K) 2012)

Planning for your retirement years can be a real challenge. Many people spend a considerable amount of time researching retirement strategies, using various online retirement calculators and trying to determine what age they might actually be able to retire. The fact is that planning for your retirement years can be stressful and frustrating, but by following three key rules, you can enjoy better results from your efforts. In fact, you may even be able to retire more quickly than you think!

Reduce Expenses
It is common for people to think about saving up an incredible amount of money in their superannuation fund and other savings and retirement accounts when planning for retirement. You will indeed need to fully fund these accounts if you plan to relax and enjoy your retirement years without financial concerns. However, by focusing your efforts on reducing your personal expenses, you will be able to retire on less money. Consider how much monthly income you would need in retirement if you were paying a home mortgage, a car loan and credit card accounts. Then consider how much easier your retirement budget would be to manage if you only paid for living expense like food, utilities and other basic expenses. By focusing on reducing your expenses now and for the years leading up to your retirement, you will be able to live more comfortably and on a reduced income.

Develop a Plan
In addition to focusing your efforts on reducing your expenses you should develop a thorough retirement plan. First, determine how much money you will need to live on based on today’s currency value. Make note of the expenses that you need to eliminate from your budget over the next few years in order to bring your budget to fruition. Then, consider how much money you will need invested into your superannuation fund and other retirement accounts in order to receive that level of recurring income. Take note of how factors like inflation and taxes will affect your financial needs in the future.

Make Regular Contributions
Now that you have a better idea about how much money you will need to save, develop a savings goal that puts you on the right path to achieve your goals. You can use online retirement calculators to assist with this step. Most workers in Australia are required to contribute some money into a superannuation fund, but there is an option to contribute more than the minimum required amount. If you determine that your current retirement contributions are falling short and may not fully fund your needs in your retirement years, consider what steps you can take to increase your contribution limits. For example, would turning off your home phone and using your cell phone as your primary phone provide you with the ability to save extra money into your superannuation fund? After you have freed up extra money in your budget, adjust your regular contributions to your superannuation fund and other retirement accounts accordingly so that your increased savings occurs without regular effort on your part. Managing your superfund can be difficult, but with self-management options from banks such as UBank, you can tailor your super to suit your needs.

As you can see, planning and saving for a great retirement is easier than you might think. Follow these steps today to get yourself on the right financial path, but be sure to review your efforts regularly to ensure that you stay on the right path.