If you were born in the 1960s, you’re now either in your 50s or fast approaching them.
If you have children, it’s possible they’ve reached adulthood and may be preparing to fly the coop.
Your sixth decade is, generally speaking, a time to consolidate your position and ready yourself for retirement. It makes sense to check you’re on track financially and, where necessary, seek advice that takes into account your personal circumstances.
Assessing your position
Your time to down tools may be drawing near, given the average age of retirees leaving the workforce is 62.9 years.1 Your 50s are likely to be your final decade of full-time work, unless you’re planning to carry on working for longer than the norm. Understanding when and whether you’ll be able to retire comfortably starts with assessing your position. This may involve quantifying the value of your assets – including your home, superannuation, investment properties and shares – and adding up your debts.
Identifying the kind of lifestyle you’d like to enjoy in retirement can, generally speaking, help you determine whether you’re on track or if you need to make changes to your current budget and lifestyle to achieve it.
If you’re a single person hoping to have a comfortable time of it, with occasional overseas travel, meals out and other luxuries, the Association of Superannuation Funds of Australia’s current Retirement Standard suggests you may need an income of about $43,000 a year.2 Couples aspiring to the same standard of living may need about $60,000. Singles happy to live more modestly will need about $27,000 a year and couples about $39,000.
Paying down debt
If you still have a mortgage on your home, or any other outstanding debts, you could consider setting yourself the goal of paying them off while you’re still in the workforce. Having these goals may provide you with a greater level of certainty and comfort a few years down the track, depending on your personal circumstances of course.
Super can be a tax-effective way to prepare for your retirement. Perhaps consider boosting your balance with additional contributions, if that suits your situation.
Downsizing is an option many Australians in their 50s and 60s consider. If you’re interested in the idea of shifting somewhere smaller and investing any surplus, you might want to investigate the federal government’s downsizer measure. It enables Australians aged over 65 who meet eligibility requirements to use the proceeds from the sale of their home to top up their superannuation by up to $300,000.3
Protecting what’s important
While everyone hopes their 50s are a time of robust health, the reality is life can change very quickly. Appropriate insurance is the key to minimising the financial impact of adverse events such as injury, illness or job loss. If you don’t have it, a long break or premature departure from the workforce could disrupt the best-laid retirement plans. It’s worthwhile reviewing your policies to ensure they continue to meet your individual needs, particularly if it’s been some time since you last did so.
If you’re still in the workforce, income protection insurance can safeguard a percentage of your salary or wages –covering you if you’re out of action for an extended period or forced to retire earlier than you’d planned. Total and permanent disability insurance can provide you with a lump sum payout if you’re left unable to work in any capacity while trauma insurance can cover you with a lump sum if you’re diagnosed with one of a specified set of serious conditions or illnesses.
Your 50s can be a decade of fun and renewed freedom as children reach adulthood and become independent. They’re also vital years for considering your financial position before you exit the workforce. Taking time to evaluate how you’re travelling and making changes if necessary can ensure you’re well placed to enjoy your retirement, when you decide it’s time to call it a day on your career.
1 Australian Bureau of Statistics, Retirement and Retirement Intention, Australia, Catalogue no. 6238.0, 2017-17
2ASFA Retirement Standard – June Quarter 2018.
3 Australian Tax Office –Downsizing contributions into superannuation- June 2018
Any general tax information on this website is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.