If you’re still young and fresh and retirement feels like forever away, aged care financial planning probably isn’t at the top of your to do list. Unfortunately, this is a common mistake that could leave you in a less than ideal situation in the future if you get to later in life and discover you haven’t put enough funds aside to enjoy your golden years in comfort. That’s why we’ve put together this list of aged care financial planning tips that can be applied at any age to help make your future easier to manage.
Decide On What Type Of Care You’d Prefer
The first thing you’re going to need to do is decide what type of care you’d prefer if you end up needing assistance later in life. While this may feel morbid to think about, the funds that you will need to maintain your lifestyle will vary greatly depending on whether you’d prefer home based care, an assisted living environment, a place in a retirement community, or something else entirely. Because of the variance in price between your options, this should always be the first stage of aged care financial planning.
Engage The Services Of A Professional
Next you’re going to want to engage the services of a professional who deals with aged care financial planning daily. They’ll be able to identify areas for improvement and consideration that may not have even occurred to you and because giving aged care financial planning advice is what they do every day, they’re experts at creating personally tailored solutions.
Invest In Your Super
If you’re still quite young, you’re probably sick of hearing about your super since you’re not going to be able to access it for decades. Unfortunately this is one of the biggest mistakes that you can make when dealing with your aged care financial planning as compound interest is a real, and very beneficial, thing. This means that the sooner you start investing in your future, the better off you’ll be, so even if it’s only a tiny amount each pay period, extra contributions can seriously add up over the long haul.
Don’t Forget You’ll Probably Still Owe Tax
One thing that a lot of people tend to forget about when doing their aged care financial planning is that if your total income from all streams and assets – including super, pension and any investments – is over the tax free threshold, you’re still going to be liable to pay taxes. With this in mind, it’s important to factor in what you’ll lose to the tax man when developing an idea of how much income you’re going to need in order to live comfortably. Admittedly you’ll most likely be in a lower tax bracket than your current one, but it’s a good idea to focus your income needs on what you’ll require after paying tax at your current rate. This ensures that you’ll be living under your means, and therefore have the funds to cover yourself if unforeseen circumstances happen to arise.
Pay Down Your Debts
Finally, it’s important to go into retirement with as little debt as possible. This means that you will have ideally paid off your mortgage and owe little to no credit card or personal loan debt. In doing this you’ll be setting yourself up for a much more comfortable retirement as you won’t have stress about interest or making repayments. Additionally, if you manage to pay everything off early, you’ll be able to invest the funds that you would have spent on these loans, therefore increasing your future income even once you stop working.
Following these tips will make your aged care financial planning a lot more accurate and helpful so we strongly suggest implementing them as early in life as possible, with that being said, it’s never too late, so no matter how old you are, get started today.