While your financial plan will be unique to you, it’s likely that the overarching aims will be similar to most people.
These will include:
- Securing your long-term financial security
- Ensuring you have enough to live comfortably in retirement
- Legacy planning to ensure your wealth passes to who you want it to.
You’ll have plans in place to achieve all of these targets, and obviously want to review and update these as necessary as you go through your working life and into retirement.
Within that framework, there are also likely to be major life events that could have a bearing on your financial circumstances and may necessitate changes to your plans.
Here, you can read about five of these, and how they could affect your long-term plans.
1. Becoming a parent
The arrival of a new child is often cited as one of the happiest events in your life.
It also has to be said, however, that raising children can be a substantial financial commitment, and while children are one of life’s greatest joys, they come with all manner of financial considerations.
A recent Finder survey found that the cost of raising one child can vary from between AUD $13,166 and $30,472 every year. Over 18 years, that equates to $237,000 to $548,500.
While it’s naturally hard to predict and plan for exactly when you’ll have children, the financial commitment required means that it’s prudent to plan ahead in terms of meeting the cost of childcare generally, and for specific items of expenditure such as school fees.
Furthermore, you may also find that the arrival of a child, or children, also raises the possibility that you might want to move to a bigger property. You will also need to consider how it will affect your income and expenditure.
Find out more: 5 simple financial planning steps that can help your children
2. The arrival of grandchildren
If you already have children, another key milestone in your life may well be becoming a grandparent.
It’s likely that you’ll want to help your children as much as you can with their new arrival, both practically as a source of childcare, but also financially.
However, while it may sound rather selfish, you should bear in mind that you are always your top financial priority.
When it comes to supporting your children with their financial commitments, you should also be aware of your own circumstances, and how much you can realistically afford to sacrifice to help your children raise their own kids.
By failing to do this, you may end up creating long-term financial problems for yourself that, if you are already retired, may be difficult to resolve.
Other issues to consider may well include your legacy planning arrangements, including any changes you may want to make to your will.
3. Reaching your peak earning years
One often overlooked milestone in your life is the time when your earnings will peak, and you are at your most financially productive.
This can be hard to identify, as it’s unlikely to be a specific moment in time. Instead, it’ll be more of a series of years during your career.
A Yahoo survey suggests that your peak years are likely to be between the ages of 35 to 44, with your subsequent salary starting to fall after you reach age 50.
This peak will clearly not last forever. So, you will want to look to maximise the opportunities your earnings will provide you with, such as saving for your future, both in your super fund, and other investments.
4. The transition from work to retirement
The move from a life of work to one of leisure is clearly one of the biggest changes in your life.
Your work will often help define who you are, and takes up a massive part of your life. So, stopping may clearly have an effect, from both a financial and psychological perspective.
Because of this, it’s something you should plan for, rather than simply leaving everything to chance.
One important point to bear in mind is that retirement does not have to be a simple “stop work one day, start retirement the next” event. Indeed, it can often help to consider a phased approach. This may help you manage the transition effectively, as well as putting less strain on your retirement fund.
As part of your planning, we would recommend you seek expert advice, particularly around issues such as how and when you start drawing income from your super fund and ensuring the long-term sustainability of your investment portfolio. This is particularly true if you hold assets or pensions in countries outside of Australia.
Find out more: 6 key steps to making sure you have a successful retirement
5. Your final years, and leaving a legacy to your loved ones
Understandably, thinking about a time when you are no longer here is difficult. However, it is something you need to plan for, and it can often be comforting to consider it from the point of view of providing for your family, and ensuring any financial upheaval is kept to a minimum.
Planning your legacy will be personal to you and will clearly depend on your intentions and wishes in regard to what happens to your wealth.
An important consideration when it comes to planning your later years is to think about any care needs you may have. It’s possible that you may need some level of support, even if your family may be able to provide it.
Because of that, it’s important to ensure that you have enough to pay for these needs.
You will also want to mitigate any potential tax implications with regard to the wealth you leave for your beneficiaries.
As you have read, it’s a life event that is hard to think about, but you will get valuable peace of mind through knowing it’s planned for.
Get in touch
Expert advice when it comes to planning for all of the events you’ve read about here is important. If you want to discuss any of the issues you’ve read about in this article, please get in touch with us.
Please note
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
This article is for information only, it does not take into account your personal objectives, financial situation, or needs. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances. All contents are based on our understanding of HMRC and ATO legislation, which is subject to change.
