How to Maximize your Savings Prior to Retirement
Reaching retirement can be daunting. Questions hover on the mind as to when exactly one should call it a day, what to do after and whether there is enough money to do it and to last.
Realizing you may not have enough money to live out your desired lifestyle in retirement can surely be terrifying but it really doesn’t need to be.
The earlier, the better when it comes to planning for retirement. However, it is never too late as the number of strategies that can help you achieve higher savings increases in the years leading up to retirement.
One of these strategies and perhaps one of the most significant ones is to increase your super contributions. This can be done by salary sacrificing part of your income (if you are employed) or just making a concessional contribution (if you are self-employed). It is important to be careful not to contribute above the limit as it can generate an excessive tax liability. If necessary and if you have reached preservation age (the age when you can access your super), you can withdraw some or your entire super over into a retirement income stream. This strategy can be used to increase your income to the pre-contribution level so that your lifestyle is not affected by the contributions you have made to your super. It can also be used to help you pay off your mortgage or any other liability you may have.
The above strategy is called Transition to Retirement and is generally viewed as a very tax-effective strategy, which can also boost your overall retirement savings. Like this, depending on your situation, there are many more strategies that can help you achieve your retirement goals and objectives. However, before you enter this or any other strategy, you must be aware which one best suits your circumstances and what implications they may have.