Create your blueprint for retirement

How to create your own blueprint for retirement with strategies that are trending now, not yesterday.

2052 0

Every fashion woman knows the devil is in the detail, and the same can be said for having a blueprint for retirement.

It may be a long while off, but it’s a wise move to start thinking about how much money you’re likely to need, and the steps you need to take, to achieve the retirement lifestyle you want.

A financial blueprint is your vision and your compass. You need one.

It is a realistic, long-term plan of action based on your unique money numbers.

It will keep you on track as you build your wealth and make your dream of financial liberation a reality.

An effective financial blueprint addresses the following key areas:

Your retirement income

The pension is not enough for most people.

Could you live on $22,542 per single or $33,892 per couple, per year, for 20 years or more?

To have the kind of retirement lifestyle you want, you need to know how much income you will need each year.

The first step to working this out is having a thorough understanding of your current financial situation.

Ask yourself the following:

  • What is your monthly gross income and net income?
  • How much is your employer contributing to your super fund?
  • What is your current super fund balance?
  • How much do you save each month?

Now, crunch these numbers:

The income you will need at retirement in today’s value. Multiply this by 25. This is the asset balance you will need to have saved for retirement.

Your projected super balance in 20 years’ time, based on the superannuation contributions you currently make.

Your projected super balance in 20 years’ time if you were to salary sacrifice or buy a property with your super fund.

Your adjusted tax rate once you start building your assets.

Your investment portfolio

Your planned retirement income will determine the size of the investment portfolio you need.

Your financial blueprint should detail the kind of assets you need and the steps required to get them.

Your retirement home

In the late 1990s to early 2000s, the standard plan for Sydney and Melbourne retirees was to sell their expensive homes and move to cheap and cheerful Queensland.

This is no longer the trend.

Retirees who live in the city now want to stay put, close to their children and to hospitals, transport and amenities.

To achieve this, you have a couple of options:

Downsize the family home

Move into a smaller, cheaper home or apartment within or near the city.

The sale price of your family home and your downsized home can be put towards your retirement income.

Apply for a reverse mortgage

A reverse mortgage is a home loan that banks offer to retirees who have huge equity in their homes but limited income.

Loan repayments are not required as the interest accumulates.

The loan is paid off when the mortgagee passes away and the property is sold.

Some retirees will still be eligible for part-pension payments, but others will not due to their assets.

They can, however, use cash released by the bank to cover their yearly expenses.

Subscribe to Financy®

Get your Financy fortnightly fix with Financy Rewards, content and more. Plus each quarter you'll receive the latest Financy Women's Index, helping you keep pace with women's financial progress.

In this article