There comes a point in your life when you will start to contemplate retirement, the prospect of which is both exciting and daunting. It’s a phase when you get to relax and enjoy the fruits of your labour and for some, the concept of retiring early is gaining in popularity. But no matter what life stage you are at, the question remains - Can you afford to retire? 

Can you afford to retire? 

Potentially. But this answer will ultimately depend on your personal and financial circumstances. AR Advisors Principal Jason Barbetti believes the key to working out if you can afford to retire is to assess your financial readiness and prepare a retirement plan. Jason says, ‘You can’t just wake up one morning and decide you are going to retire. You need to plan for it, assessing your finances, looking at key indicators such as your current expenditure, asset pool and future costs aligned to your financial goals and retirement lifestyle aspirations.’ 

Deciding when to retire and if you have enough money requires careful consideration beyond your superannuation balance. To kickstart your retirement planning journey, Jason recommends three key steps: 

1. Determine your retirement needs

When you think about retirement, what does it look like for you? Do you want to travel the world? Buy a new house or new car? What about healthcare expenses as you age? Considering your lifestyle preferences and planning for future needs including unexpected expenditures, will help you determine a retirement figure which you can use for planning to reach your financial goal.  

2. Assess your current financial situation 

The next step in your retirement planning process is to evaluate your current financial status to determine your net worth. This involves taking stock of your savings, investments, outstanding debts, and any other assets at your disposal. Calculating your net worth will help you assess where you are financially versus where you want to be when you are ready to retire. You can then start to build a retirement plan that will help your bridge the gap. 

3. Develop a retirement plan 

Your retirement plan is your roadmap to financial freedom and a fulfilling retirement lifestyle. Some of the strategies to consider as part of your retirement plan include: 

• Reviewing your superannuation balances and considering superannuation contributions.  

• Investing in income producing assets such as property or shares.  

• Paying off your debts sooner.  

• Reducing expenses to free up more money for retirement savings. 

• Delaying your retirement age to allow more time to save and invest.  

• Consider downsizing your home. 

• Seek professional advice. Retirement planning can be complex and seeking advice from a professional can add significant value through critical areas such as tax optimisation strategies, astute investment approaches and estate planning advice.  

When is the best time to start retirement planning? 

While most people don’t start retirement planning until they are well into their 50s, Jason suggests starting much earlier. ‘If you wait until your 50s to start planning then it might be too late to save enough money to do all that you want to do. You need to strike a balance between living for today and putting away money for the future which may allow you to retire comfortably,’ said Jason.

Whether you’re planning to retire early or are simply curious about securing a comfortable future, having a retirement plan is essential to give you confidence in your financial future. 

Planning your retirement – AR Advisors can help 

At AR Advisors we understand that retirement planning can be stressful as you plan for the unknown. We can help provide the understanding and guidance needed to make the right decisions for your specific circumstances. Get in touch today to find out how we can help you conduct a value gap analysis and get you on the path to retirement sooner.