Market Update – November 201716/11/2017
Fitness guru Fred Liberatore, 51, knows first-hand the importance of making astute choices in your 50s.
Fred is the twin brother of Brownlow medallist Tony Liberatore and uncle of AFL premiership player Tom Liberatore.
Fred is in the best physical shape of his life, winning body building competitions and running the thriving Real Fit gym business. He has observed the impact of his clients’ choices in their 50s on their strength, mobility, independence and life satisfaction in retirement, and knows that this is a critical decade. He believes that living a healthy lifestyle is better than any pill for not only living longer, but living happier.
There are many parallels between fitness and finance. Your 50s may be some of your highest earning years and with the financial responsibility of kids mostly off your hands, it is the ideal opportunity to build retirement savings. Let’s look at how to build a nest egg that, with increasing life expectancies, will need to stretch further into the golden years than it did for our parents.
Put a dollar value on a comfortable retirement
Fifty is the time to hang a dollar amount on your post-career life and create a plan to achieve it. Rather than focus on a lump sum figure, start by understanding the regular income you will need to live comfortably in retirement. Most superannuation companies have a retirement calculator available online or use the online retirement planning tools at Australian government website Money Smart.
Turbo charge retirement savings
Even if you have suffered past financial setbacks, a serious burst of saving in your 50s when you’re at your peak earnings, can help you play catch up.
If your children are now adults, consider downsizing your home and investing the residual funds. Trying to live off your retirement budget now is a good opportunity to save the difference and test whether your spending assumptions are realistic, while you still have the time to make adjustments. Consolidating and getting rid of things you no longer really need, like a second car, will not only liberate some capital, but will reduce costs such as insurance and registration.
Avoid the financial sandwich
Your 50s can be the time that you find yourself sandwiched between the needs of your children and those of your ageing parents.
To ensure the love and obligation you feel to your family does not compromise your financial security, the first step is to close the ATM of mum and dad. Being a bank for your kids does not help you or them. Financial independence is a powerful gift to give your children as they become adults. Even if kids are still living at home, asking them to meaningfully contribute to household expenses helps them understand what things really cost.
It’s also time to consider the impact of ageing parents and how caring for them may affect you financially. While your parents are fit and healthy is the best time to discuss with them, and your siblings, their plan for the future. Helping them make a realistic assessment of their options and financial capacity will assist in avoiding debilitating surprises. The Australian government’s My Aged Care website has helpful tools to assist in decision making.
Build your muscles
In the same way as you need to work to maintain fitness, building and maintaining financial capability requires regular effort. Practising disciplined cashflow management and taking an active interest in your superannuation and other investments will help you feel confident and in control once you give up the security of a regular salary.
As Fred Liberatore points out, the great thing about exercise is that it can prevent many age-related changes to muscles, bones and joints – and reverse these changes as well. It’s the same with your finances. Even if you have been a slow starter on saving and investing, it’s never too late and your 50s are the perfect time to ensure you have the financial muscle you need to fund a long and active life.
Fred Liberatore, the twin brother of Brownlow medallist Tony Liberatore and uncle of AFL premiership player Tom Liberatore, runs the Real Fit gym.
“Financial independence is a powerful gift to give your children.”
Published by The Age, September 22, 2017. Article by Catherine Robson