Retirement is a milestone that many look forward to. It's a time to relax, travel, pursue hobbies, and enjoy the fruits of your labor. However, to ensure that you can live the retirement you desire, it's important to have a plan in place, and the earlier you start planning, the better! Here’s seven steps you can take to ensure a comfortable and stress-free retirement.

Step 1: Determine your retirement goals

The first step in preparing for retirement is to determine your retirement goals. How much money will you need to live the retirement lifestyle you want? Will you travel extensively, purchase a new home or car, or pursue a range of hobbies? It's important to have a clear idea of what you’d like to do during retirement, so you can plan accordingly.

Step 2: Understand your superannuation

If you haven’t already, get to know your super! Understand how it works, how much your employer is contributing, the fees associated with your fund, and the investment options available to you. If you are able to, consider making additional contributions to your superannuation to increase your retirement savings. There are also tax advantages and incentives from the government that make super one of the best ways to build funds for retirement. To understand more about your super, head to our Understand Super blog post.

Step 3: Create a budget

You need to know how much money you have coming in, how much is going out, and where your money is going! This will help you determine how much you need to save for retirement, as well as identify areas where you can cut back on expenses. Become crystal clear on this and it will greatly improve your ability to make important financial decisions around your lifestyle choices. This, in turn, can help you to smash out some clear financial goals that align with the retirement goals you have made in step 1! There are many budgeting tools out there but we’ve made it easy for you and created a cashflow workbook to get you started.

Step 4: Pay off debt

Paying off debt is a crucial step in retirement planning and ties in with step 3 above, of creating a budget. You don't want to be burdened with debt in the lead-up (or during!) retirement, so it's important to live within your means and pay off debt before you retire. This includes credit card debt, car loans, and mortgages. This will free up more money for retirement savings.

Step 5: Consider downsizing

Downsizing is an option for retirees who want to reduce their living expenses. This could include downsizing your home, car or even relocating to a less expensive area. Downsizing can also help you free up equity in your home, which you can use to fund your retirement. There are some great tips in this retirement blog post if considering a move.

Step 6: Plan for Healthcare

As you age, healthcare costs can become a significant expense. Seriously consider planning for healthcare costs in retirement, including health insurance, prescription medication, and any potential long-term care costs. Health insurance provides valuable coverage for medical expenses, so researching and selecting the right plan that suits your needs is important. Check in with your health insurance fund too! As we age, our health insurance needs can change so it’s good to know you’re fund has your back!

Step 7: Seek professional advice

Retirement planning can be complex, so you may want to consider seeking professional advice. A financial adviser can help you determine how much you need to save for retirement, create a retirement plan, provide guidance on investment strategies, and help with estate planning. A tax professional can also help you minimize your tax liability during retirement.

If you’d like to know how our Sound Life team can work with you to achieve your financial and lifestyle goals, you can read more here.

Remember to start planning early, seek professional advice, and stay focused on your retirement goals!