5 easy finance tips for people over 50
Money is something that most of us only get better at managing with experience, so getting some professional can put you ahead of the game. Avoid learning from mistakes and make the right choices and decisions today so you have a more comfortable tomorrow. Lara Bourguignon, AMP Wealth Solutions and Customer Business advisor, has five financial tips for people aged over 50.
1. Get to know your finances better
“With life expectancy continuing to rise, the reality is that today we need to make our earnings from 40 to 50 years in the workforce, extend across 80 to 90 years of living. Everyone has different dreams for their retirement. It could be travel or something just as simple as spending time with your family. Knowing what you want in retirement and then linking this to your superannuation goals is the key to feeling in control.”
“Too many Australians fail to plan for this and find themselves short on super. Understanding what super shortage (if any) you have will allow you to proactively plan for your future. Taking the time to look at this in your 50s means you still have time to make any additional contributions you might need to.”
“There are lots of great tools out there which can help you to work out what your annual retirement income might be, how long your money may last and what you can do to maintain your lifestyle when you retire. For Australians, this insight provides a useful tool to help meet their financial goals in retirement.”
2. Cash flow in your fifties
“A popular method for Australians in their 50s to increase their cashflow is the transition to retirement method (TTR). That is, for those aged 56 years and over, you can draw on your super whilst working.”
“Having access to a TTR income stream can provide greater financial flexibility in your 50s as you can periodically draw from your super while still continuing to work full-time, part-time or casually. The other benefit here is it allows you to ease yourself into retirement slowly over time by reducing your working hours.”
“For others who have excess cashflow, as a general rule and where possible, any additional income should be put into your superannuation and salary sacrificing can be an effective way to do this.”
“What makes salary sacrifice such an attractive option for people is that it adds to your super balance but it can also be an effective way to reduce your overall taxable income. There are limits and a lot of factors to consider so it is important to seek financial advice before jumping into anything.”
3. Remember that there is always time to set and achieve goals
“This may be obvious but paying your debts off sooner rather than later will provide you with more freedom in retirement. Whether it’s a mortgage, credit card debt or a loan, aiming to have these paid off before retirement is a good financial goal to strive for in your 50s.”
“Work with a financial adviser to help you put together a budget that allows you to pay off your debts as fast as possible, while still making regular super contributions.”
4. Think twice about being the ‘Bank of Mum & Dad’
“With it being harder than ever for younger generations to get ahead financially, as parents it can be tempting to constantly open the bank of Mum and Dad. For example, it can be tempting to pay your child’s HECs debt or help put money towards a house deposit. Before doing so, you should check your financial position and ensure that if you do assist your children, you will still have sufficient savings to support you in retirement.”
“Another factor to consider in your 50s if you have adult children living at home is to get the kids to help chip in for household expenses. This could even include board/rent payments which can help you get your home loan down faster and as a bonus, it helps teach the kids to budget.”
5. Check up on your insurances
“When you reach your 50s checking up on your insurances is an important step to take. Generally speaking, your insurance needs may change as you begin the transition to retirement. Your existing policies may still cover your full mortgage requirements and family expenses. However, if the kids have left the nest then your needs may change.”
“It is also important to make sure your life insurance policies are up to date and understand the different parts of the policy. Most people hear the term ‘life insurance’ and think it is just for when you pass away. However, there are different covers that make up a life insurance policy. Knowing whether you’re covered for income protection and trauma is important and will provide peace of mind.”
All the advice in this story is general in nature and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.
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