Are you 55 with no savings?
Are you 55 with no savings?
Life is not easy. Earning money is not easy. Saving money is even more difficult.
Do you remember when you were 20 years of age? Your plans, dreams, aspirations and hopes?
Can you see your last 35 years gone by? You might even feel like you accomplished very little.
But devoting yourself to your children, your partner, your home is a big accomplishment on its own.
Only now, you must start thinking about yourself.
You must take specific steps to take control of your finance to start building your financial security.
I hope this will be easier with few suggestions for late-starters:
Long gone are days when people retired at the age of 55. As our life expectancy increases, we need to keep working longer. Otherwise most of us would outlive our savings and that’s not a pretty picture. Official retirement age in Australia is now 65 for superannuation purpose, but 66 for Age Pension eligibility and rising to 67 by 2023, therefore it gives you a chance to focus your efforts and energy on building a solid savings pattern and a great investment portfolio.
If you have no outstanding debts and can save $1,000 per month, with well-diversified balance investments, you could save approx.. $351,652.00 over the period of the next 15 years.
Spend less than you earn
This is the real key to financial security. Seems simple, but somehow most people get it wrong. Unfortunately, there is no way around it. Budget calculator should become your best friend.
Other ideas how to save:
- Always do shopping with your shopping list
- Do shopping weekly or fortnightly, not daily
- Best idea ever – let the man of the house to the shopping – he will do it fast and to the dot what’s on the list – just to get out fast from those dreadful shops
- Cross-check prices on-line
- Buy items on special and home-brands (same quality, lower price – bingo!!!)
- Check your general insurances annually (home, contents, car etc)
- Review your credit cards (membership fees, interest rates)
- Check your mortgage interest rates (if applicable)
Pay yourself first
This plan is all about you and your future. If you want your future to be different, you need to change your behaviour around money. Whatever you have calculated is your maximum savings amount, invest it according with your investment plan and use the rest as your living expenses. You will be surprised how you are able to adjust your spending habits based on money available.
Also, if you really find “budgeting” difficult, paying yourself first helps dramatically to remove this issue. You have no choice, but to adjust your lifestyle to the amount of money you decided to leave yourself for daily expenditure.
Invest your income surplus
So you have decided to pay yourself first, but what should you do with your savings? Leave it in the bank will give you no interest and you understand that keeping money long-term in cash will diminish its value, so you need to earn more than the level of inflation.
Focus on investing in assets that can appreciate in value over time but also can generate a passive income for you. Property when selected correctly and with professional guidance, can become a great source of extra income.
Stock market can also provide you with regular income from dividends and could be very tax effective when including franking credits from some Australian companies.
Remember however, that diversification between different investment classes is the key.
This is the area where a good professional advice can add a tremendous value.
Are you able to downsize?
Many families and single parents find their home too big and with far too much maintenance once kids leave to start their own life. Downsizing not only can improve your lifestyle (less work at home), but also improve your financial position. It can free-up extra cash that you can use for your retirement planning.
Warning: If you are in receipt of any Government assistance benefit, please speak to a professional adviser before implementing any changes.
Be very careful with consumer debt
If you are relying on credit cards to cover your daily expense or if you are repaying one credit card with another – STOP – Please get advice immediately. At this point your priority should be to repay cards and stop paying high interest to banks.
Generate extra income
Today is easier than ever before to earn extra income. This is due to the assistance of technology as well as social acceptance and variety of income possibilities:
- Rent a room in your home
- Get a “home-buddy”
- Build a “granny-flat” on your back-yard and rent it out
Start business on a side
With no work security, need for working-hours flexibility and improved life-style, more and more people look for a job alternative. Many start their small-business or work from home and others do it on a part-time basis to supplement their main job income and improve savings. Today there are plenty of opportunities to improve your income and your lifestyle.
Pay attention to your health and be active
Healthcare is very expensive, especially when we get older. If possible keep your Private Health Insurance in place. Focus on preventative activities such as regular exercise, healthy diet and social involvement.
Seek professional advice
Many clients tell me how surprise they are of the little items that I can notice and recommend, that can make a huge difference in their life. Sometimes those items have nothing to do with the finance topic we discussed.
Whether it is me, or another financial planner, but please speak to a professional. You will be astonished at the value you will receive just from the very first conversation.
If you want to improve your financial future, have secure income and be able to truly enjoy your life and do what you really want to do, seek professional advice to achieve the financial security you deserve.
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