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Retiring in 10-15 years’ time? Here’s how to prepare now
The No.1 question people ask me on radio is: if you are preparing for retirement in 10-15 years’ time, when should you start thinking about it, and what would you do? Here's my answer
I’ve spent a lot of time on talkback radio this week talking about my new book, How to Have an Epic Retirement. The No.1 question people ask is: if you are preparing for retirement in 10-15 years’ time, when should you start thinking about it, and what would you do?
My answer? If you want to have the financial confidence to retire in 10-15 years’ time, you need to think about your goals and ambitions, about your budget, and get comfortable with how to shape a financial position to fit, ideally sooner rather than later.
One of the most powerful levers you have in growing your retirement savings before retirement is time and the power of compound investment. Superannuation, invested well, at an average return of 7-10 per cent a year, can double in value every seven to 10 years through passive compound interest alone.
Most people don’t realise this and take it seriously only with four to six years to go. While that’s still a reasonable amount of time to improve your financial situation, if you can motivate yourself 10-15 years earlier and take a few critical steps, you could put yourself in a far better position.
The list of things you can do 10-15 years out from retirement isn’t especially tricky, but it does require some dedicated effort on your part. So do it once, check in once a year and know that your strategy is off to a running start.
Build a vision
If you don’t start thinking about what your own part-time or full-time retirement might look like before you get there, you might find it hard to motivate yourself to do the financial work early enough.
Become a bit more alert to what you might like your retirement to look like. Start to talk about and picture the holiday destinations you might visit and some projects and activities you might pursue when you have a more passive income. Think about where you’d like to live and start incrementally piecing together a vision for this stage ahead of time.
Take advantage of superannuation concessional contributions
Take the time to learn about superannuation concessions and how to use them. I know – it’s not the most riveting subject. But learn the basics and you’ll find that you can contribute up to $27,500 a year to your superannuation at just 15 per cent tax (and your employer is already putting some of this in).
Article continues on Sydney Morning Herald website. Read the full article here.