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Many women in their 50s are asking themselves: “How do I prepare for retirement without financial stress? Can I reduce my working hours or transition to a new career without jeopardising my future?”
If you’re wondering the same, you’re not alone. The good news is that with the right strategy and advice, you can build financial security while designing a truly fulfilling life.
Let’s explore strategies to help you make informed choices.
Understanding life expectancy and living arrangements
In Australia, a 50-year-old woman today can expect to live until about 87 years. Additionally, many women find themselves living alone as they age. As of 2021, 55% of individuals living alone were women, with half of these women aged 65 or older. If you retire at 60, your retirement savings will need to last for approximately 30 years! So how it’s important to ensure you’re prepared for a secure and independent life.
Assessing your retirement readiness
- Envision your retirement lifestyle: Consider where you’d like to live, the activities you’ll pursue, and any travel plans. This vision will help estimate your future expenses.
- Estimate your expenses: The Association of Superannuation Funds of Australia (ASFA) suggests that, for a comfortable retirement at age 67, single individuals need an annual income of approximately $51,814, while couples require about $73,031. These figures assume home ownership and good health and reflect a typical year of expenses, but you should also remember to account for one-time expenses like home improvements / relocation or purchasing a new car.
- Evaluate your superannuation balance: ASFA recommends a superannuation balance of $595,000 for singles at age 65. However, data indicates that Australian women aged 60 to 64 have an average balance of about $318,203. This gap highlights the need for many women to boost their retirement savings.
- Identify income sources: Determine where your retirement income will come from, such as superannuation, investments, rental properties, part-time work, or government pensions. Diversify your income sources to create long-term financial stability.
- Plan for emergencies: Set aside accessible funds for unexpected expenses, like medical emergencies or urgent repairs, to avoid disrupting your long-term financial plans.
- Assess investment risk: As you approach retirement, consider adjusting your investment portfolio to align with your risk tolerance. While growth is essential, preserving capital becomes increasingly important.
- Seek professional advice: Work with a financial planner to develop a tailored plan that aligns with your goals. Professional guidance can provide clarity and confidence in your financial decisions.
Considering career changes or reduced work hours
Contemplating a career shift or reducing work hours in your 50s is common. To ensure these decisions don’t compromise your financial wellbeing:
- Analyse the financial impact: Understand how a change in income will affect your savings trajectory and retirement timeline.
- Explore flexible work options: Consider part-time roles or consulting opportunities that provide income while offering flexibility.
- Upskill or reskill: Invest in education or training to transition into roles that may offer better work-life balance or fulfillment.
- Network actively: Leverage professional networks to discover opportunities that align with your desired career path.
Overcoming common roadblocks
Several challenges can impede financial goals in later life, including supporting children, caring for elderly parents, health issues, or unexpected redundancy. Additionally, self-doubt or lack of confidence can hinder proactive planning. To navigate these obstacles:
- Set clear boundaries: While it’s natural to support loved ones, ensure it doesn’t jeopardise your financial security.
- Prioritise self-care: Attend to your health and wellbeing to maintain the ability to work and enjoy retirement.
- Stay informed: Educate yourself about financial planning to make informed decisions.
- Build a support system: Surround yourself with professionals and peers who can offer guidance and encouragement.
Enhancing your retirement savings
Given that many women have superannuation balances below recommended levels, consider strategies to boost your savings:
- Make additional super contributions: Take advantage of contribution rules to grow your superannuation.
- Eliminate debt: Aim to pay off outstanding debts before retirement to reduce financial burdens.
- Optimise investments: Review your investments to ensure they aligns with your retirement goals and risk tolerance.
- Consider government Social Security entitlements: Explore the Age Pension and other government benefits that can supplement your retirement income
Approaching retirement and considering career transitions in your 50s requires careful planning and self-reflection.
By envisioning your future, assessing your financial situation, and seeking professional advice, you can make informed decisions that support a comfortable and fulfilling retirement.
Remember, it’s never too late to take charge of your financial future.
The Money & Life website is operated by the Financial Advice Association (FAAA). The views expressed in this article are those of the author and not those of the FAAA. The FAAA does not endorse or otherwise assume responsibility for any financial product advice which may be contained in the article. Nor does it endorse or assume responsibility for the information.
