Retirement for many people will always feel like it’s a long way off – until suddenly it’s not! Right now you could be a successful business owner with young children, thinking that with another 10 years of school fees, retirement is at least that far away. You are likely contributing to your superannuation during this time but you could also have a nagging feeling that it needs closer attention. Although you could have many more years of working before you need to consider retirement, planning for it as early as possible will help prevent the feeling of standing on a cliff face when it does arrive.
Planning for retirement requires considering many questions, with some key ones being:
- What does retirement mean to me? Never working again, working part time or simply doing some paid work here and there when it suits? Or even volunteering?
- Does it involve a lot of travel?
- Do I have the right people involved in my business so I can phase down my involvement easily?
- Do I want to exit quickly or gradually from my business or position?
- Can I retire before the kids finish school or university?
- How much will it cost me to live comfortably each year?
- Can I be debt free by then?
- Will I have enough superannuation?
The answers to these questions require reflection and discussion with family and other trusted advisors. Whether they are set in stone or simply pencilled in for ongoing review will also be a matter of personal preference.
For a business owner, it pays to start the planning process earlier so you can align your strategy with your desired exit. Whether that is a management buyout, a sale to a third party, passing on the business to family or simply walking away. Regardless of which path you choose or have in mind, you will need to know what your business is worth, which is a question many owners don’t answer, sometimes until it is too late.
Superannuation is clearly a key part of retirement planning. It also remains very topical due to constant law changes over the last few years and the ongoing Hayne Royal Commission into banking, financial services and superannuation.
Some of the key considerations here include:
- Should I maximise my concessional contributions each year or are there more pressing financial priorities?
- Do I have the time or inclination to manage it myself using a Self-Managed Superannuation Fund (SMSF)?
- If I’m not ready or interested in an SMSF, do I have the right retail or industry fund? Do I have the right risk profile and investment strategy in place with that fund?
- Do I need to consolidate more than one superannuation account?
- If interested in SMSF, do I know enough about the requirements and obligations of running one?
- If I have my own business and require property, is it a suitable retirement strategy to look at purchasing property in an SMSF?
Superannuation is something that will need to be monitored more regularly than retirement plans. It is an area that is highly regulated, where a poor decision or mistake can be very costly to deal with and unwind (if it can be unwound at all). Therefore, it is recommended that appropriate professional advice is sought before implementing any superannuation strategies or plans.
Interested in speaking with an advisor in more detail about your personal future? Contact your local office and see how Accru can help you plan your future.