Everything you need to know about money in your 50s
Your fifties are a time when most people have their finances well under wraps. However, if you have some questions about how much you should have in your superannuation account, or how much other people your age are taking home in their pay packet each month, then you’ve come to the right place. We have done the research so we can answer every question you’ve ever had about money in your fifties and retiring.
What should you be doing with your super?
ASFA estimates the lump sum needed to support a comfortable lifestyle for a couple is $640,000 (or $545,000 for a single person) assuming a partial Age Pension. ASFA also estimates that because a modest lifestyle is mostly met by the Age Pension the lump sum required to support it for a single or couple is $70,000.
“If you’re still working, now is the time to plump up your superannuation account as much as possible. If you’ve been planning for retirement for some time, you might be able to retire early,” says Mark O’Leary, of KRA Wealth Management and AMP financial adviser. “Alternatively, if you want to stay in the workforce for whatever reason, you can access a transition to retirement income scheme (TTR). This way you can periodically withdraw money from your super while continuing to work full-time, part-time or casually. There are a few restrictions around how much you can withdraw and tax considerations to factor in, so it’s important to do your homework first if this is something you want to consider.”
Want more information on retirement? Read our guide HERE.
Superannuation mistakes to avoid in your 50s
According to Gemma Dale, NAB finance specialist, the best thing you can do is to plan for retirement early. The biggest mistake you can make is failing to plan at all. Another mistakes is letting your family impact your superannuation and retirement, such as caring for children or older family members. Gemma suggests those who are caring for their elderly parents full-time ask siblings or other family members for help to reduce the financial strain.
“A challenge for Australians nearing retirement is borrowing close to their retirement and still having substantial debt to pay off. Retiring debt free should be your first goal, followed by boosting your superannuation,” says Gemma. “Another mistake is loaning more money to your children than you can afford.”
Want to know what mistakes to avoid? Read the full guide HERE.
Money matters you should take care of in your 50s
Your fifties are a time you should be able to reclaim most of your time and money for yourself, rather than the kids! Once you turn 65 it might be time to start thinking about downsizing your home. The federal government has introduced a downsize incentive for homeowners over 65 from July 2018. The scheme enables homeowners to use the proceeds of the sale of their home to make a one-off deposit of up to $300,000 each into their superannuation fund, and it doesn’t count towards the voluntary super contributions cap amount.
Are you a female looking for superannuation advice? Read our guide HERE.
How much money should you be saving in your 50s?
ME Bank reports that 25 per cent of households in Australia have less than $1000 in savings, and that 25 per cent of Aussies are living paycheque-to-paycheque. “Although it’s dependent on your situation, it’s good practice to work out how much money you’ll need to retire, and then much you need to live your current lifestyle per month, and work out a budget that will help you reach your savings goals,” says money expert and finance author Vanessa Stoykov. “At this age it’s important to remember your goals, and why you are following the financial plan you are. That way, your mindset will switch from feeling as though you are making sacrifices, to knowing what life will be like if you make that change.”
Want to know how your situation stacks up to the average Australia? Read the guide HERE.
How much money should you be earning in your 50s?
According to data collected by the Australian Bureau of Statistics people aged between 45 and 54 should be earning $5928 a month before tax, people aged 55 to 65 are earning $5286 per month before tax.
Official government figures given to The New Daily by the Treasury indicate the average wage in Australia is just over $62,000 a year, while data from the Grattan Institute suggest the median is just a little over $55,000.
Need some finance tips for your 50s? Read the guide HERE.
What assets should you have in your 50s?
“As many as you can!” says Vanessa. “Whether it be properties, artwork, shares, etc. as many as you can at this age is important to set yourself up for the best retirement possible.”
Want to know how to make your savings work harder? Read the guide HERE.
What is the biggest drain on finances in your 50s?
“Injury or divorce. It’s not a nice reality to think about, but ensuring you are prepared for either situation should put your mind at ease in case the worst case scenario happens.”
Do you need advice on how much funerals cost in Australia? Read the guide HERE.
Money habits you should have in your 50s
“Talk openly about your money goals,” says Vanessa. “Make a financial plan, set goals, and tell people. By sharing with your family and friends that you want to save ‘X’ amount of money in order to go on an overseas trip will not only hold you accountable, but it will also help them understand why you are cutting back on social activities. Plus, it might also inspire them do the same, so you can both work towards shared goals.”
Need some tips for cutting through your financial paperwork? Read the guide HERE.
Once you have retired…
Once you have retired it is important to remember that you no longer have regular payments coming in, unless you have cash coming in from a pension or investment. Now is the time to set up a budget and stick to it so you have enough money to make the most of your golden years.
However, finance expert and author Vanessa Stoykov has a sobering reminder why it’s so important to plan for retirement early. “At the current rate, 80 per cent of Australians won’t be able to afford a comfortable retirement.”
Is the downsize incentive right for you? Read our guide to downsizing HERE.
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.
