How to retire early (before age 60)

A common goal we hear from clients is "We want to retire early".

Given that superannuation access age starts from age 60, we consider anything pre-age 60 as 'early'.

To retire early you need to achieve three things:

1. Have paid off your primary residence mortgage

You don't want to have debt in retirement for a number of reasons including:

• The repayments are an ongoing expense which unnecessarily adds to your total living expenses.
  

• It can be difficult to refinance debts with banks past certain ages, and particularly if you are not working, meaning you could get stung with high rates.
  

• Having debt past age 67 is not good for receiving the Age Pension, as Centrelink do not use these debt values to offset the assets you have. Therefore, you should use the assets like cash to eliminate the debts, and reduce your assessable assets to receive more Age Pension.

2. Have built your superannuation to a level that it can support your retirement for at least 30 years

For clients approaching retirement now, it will be very common for people to live into their 90's. Therefore, we need have adequate superannuation balances to sustain long retirements.

As Financial Advisers, we can help model what amount you need in superannuation to safely retire based on:

• Your estimated annual living expenses

• The estimated rates of returns

• Factoring in any important goals you may have

3. Have sufficient investments outside of superannuation to sustain your living expenses until you reach super access age 60

The closer to age 60 you want to retire, the less personal investments you will need, and of course, the inverse is true.

Again, as Financial Planners, we are skilled in:

• Calculating how much you we need to save by your goal retirement age

• Then, calculating how much we need to invest now and each month to reach that amount

• Recommending the suitable investment options for you

• Minimising the tax consequences

The trade off discussion:

Whilst the goal of retiring earlier is completely understandable, one of the key areas of value that Financial Planners provide is by helping present the trade-off decisions in doing so.

For many people, retiring earlier may mean sacrificing more in the present.

Therefore, one of our roles as Financial Planners is to get very clear and specific around your goals and objectives, and when necessary help you make trade off decisions to live the life you really want.

If you want to chat about the trade offs of retiring early you can:

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The purpose of this blog is to provide general information only and the contents of this blog do not purport to provide personal financial advice.  We strongly recommend that investors consult a financial adviser prior to making any investment decision. The contents of the our blog does not take into account the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making any financial or other decisions. The information is selective and may not be complete or accurate for your particular purposes and should not be construed as a recommendation to invest in any particular product, investment or security. The information provided on this blog is given in good faith and is believed to be accurate at the time of compilation.