Do you need to reconsider your financial approach based on changes?
Some life events make it obvious that it’s time to revisit your finances – being made redundant, receiving an inheritance, or a major health event. But smaller, less noticeable changes can also have a significant impact. These might be fluctuations in your super balance or changes to government rules about superannuation, pensions or tax.
You may also have missed reading your 2024 superannuation member statement, especially since these often arrive months after the end of the financial year. By the time they land in your inbox, it’s the holiday season, and reorganising your money situation is often pushed down the to-do list.
The thing is, we have competing claims on our attention and time; we may have conflicting schedules with our financial partners or end-of-year burnout. It’s easy to procrastinate, or maybe we are eager to dive into a review, but don’t have all the information we need to make an informed decision.
The short answer to ‘Do I need to reconsider my financial approach?’ is yes!. Financial changes – big or small – happen constantly, and reviewing your plan each year ensures you’re adapting to the current economic environment, market conditions and ever-evolving rules relevant to superannuation, pensions and taxes.
Let’s explore a few of the key triggers that might prompt a review.
Changes in your investment or super fund performance
If your superannuation balance has fluctuated recently, it’s worth understanding why. Is it due to market performance? Or is it the investment options you’ve chosen no longer align well with your goals?
Annual member statements provide important insights, but they’re just the starting point. A deeper review can help you stay on track and make informed decisions about balancing growth and defensive assets.
Life milestones and income adjustments
Certain ages come with financial opportunities or obligations. For example:
- At age 60, your super withdrawals become tax-free, opening doors for more flexible retirement income options. You can also use a Transition-to-Retirement (TTR) strategy.
- By age 67, you might become eligible for the Age Pension, which could supplement your income and affect the way you draw down your super.
- At age 75, the rules around super contributions change, so planning ahead can make a big difference.
Apart from age milestones, life changes, reducing working hours, starting a part-time job, or receiving a pay increase can also affect your financial plan. These adjustments may require a new strategy to manage cash flow or boost retirement savings.
The impact of broader economic changes
Interest rates, inflation, and market conditions aren’t static – and they influence everything from investment returns to loan repayments. For example, a drop in interest rates might mean revisiting your income projections, while ongoing rising costs could affect your spending plans.
Unexpected life events: inheritance or redundancy
While some changes are expected, others such as receiving an inheritance or facing redundancy can catch you off guard – even if you knew it was a possibility. These events can create financial uncertainty, but also present opportunities to reassess your long-term goals.
For example, an inheritance could give you the chance to pay down debt, invest in super, or explore other strategies to secure your retirement. On the other hand, redundancy might require rethinking your budget or finding ways to make your retirement savings stretch further.
Taking Action
Even if you only review your situation once a year, you’ll be in a better position to spot opportunities and avoid risks that might otherwise go unnoticed.
Here’s how to take the first step:
1. Schedule time for a review. Block out some time in your calendar to take stock of your financial situation.
2. Use helpful tools. The Retirement Essentials Safe Spending Simulator and the Retirement Forecaster can provide clarity on your spending capacity and potential entitlements.
3. Consult an expert. A tailored financial consultation can guide you through optimising super contributions, planning for milestone ages, or navigating unexpected life events.
Your financial review checklist
- Establish your goals: What lifestyle do you want, and how much is it likely to cost?
- Understand your position: Review your super balance, income sources, and liabilities.
- Maximise entitlements: Ensure you’re receiving everything you’re eligible for, including the Age Pension, concession cards or other benefits.
- Plan for the future: Think ahead about healthcare, home modifications, or potential aged care needs.
- Communicate openly: Talk through your plan with your partner if you’re in a relationship.
- Stay informed: Regularly review market trends, rules, and investment strategies
Peace of mind starts here
A proactive approach can help you manage your finances with clarity and confidence, avoiding unnecessary stress when life changes occur.
Ready to take the first step?
Book a consultation with Retirement Essentials today and start building a financial strategy that adapts to your needs—now and into the future.
What changes have you experienced recently that made you pause and rethink your financial approach?
Was it a major life event, a subtle shift in your circumstances, or something unexpected?
