Retirement planning is not just for those who are about to retire. In fact, the earlier you start planning for retirement the better your financial position will be in retirement as you’ve had more years to create wealth.
The problem is that when we’re young we’re enjoying life and years away from retirement so don’t see the need to plan for it and put money aside. You can’t quantify the significant impact some simple strategies could have.
What if your goal is to retire before 65, before you can access your super? Or if you could work the hours you “want to” instead of “have to”, even if you love your job.
What can Gen Y’s do to plan for retirement?
Firstly work out what retirement means to you and how much you think you’ll need per year in retirement. The average Australian couple living the average 20 year retirement will need around $670,000. For most people their employer compulsory super contributions will not be enough to fund their all their retirement years.
Next step is to put a plan in place for how to save the money required for retirement over your working life. This may be through making personal super contributions, building an investment portfolio and/or saving. However you decide to retire and save for it is your choice but I recommend you speak with a qualified financial adviser who can assist you to workout appropriate financial strategies for you.
Most people achieve financial independence through home ownership. Once you’ve got a full time job you should consider saving a percentage of your income towards a deposit on your house and creating a life-long habit, like you’re already repaying a home loan but without the responsibility yet. This will help make your actual home loan more affordable, and you should be able to get a better deal, if you build a strong deposit of say at least a 20%. If living with your parents for a short time means being able to save more of a deposit this could be a wise choice.
Finally, if you have any credit card debts or small loans repay these as quickly as possible so that you can then focus on saving and building wealth. Another point to consider for a home loan is that having a good credit history will also assist you obtain finance when the time is right so don’t live above your means and build credit card debt.
Now it’s time to get started. The earlier you start building wealth, the better you will be.