At a glance …
- Budgeting, paying down debt and changing your thinking are key when it comes to strategies to get out of a pay-to-pay pattern.
- Editor of Money Matters, Effie Zahos, has provided a decade-by-decade guide to suit your super at every age.
By your 50s, most of the financial building blocks are already in place, and the focus starts to shift from building everything up to making sure it’s all working together and heading in the right direction.
This is often the decade where people start thinking less about “how do I grow everything?” and more about “is this actually set up for the next stage of life?” That’s why this decade is often about tightening things up and making sure everything is still pulling in the right direction for you.
Get a clearer sense of where you’re heading
This is a good time to start looking ahead and thinking about what the next 10-15 years might look like for you.
That doesn’t mean putting together a detailed retirement plan, but it can help to start getting a rough sense of timing and direction. That might include whether you want to be mortgage-free by a certain point, when you might want to start winding back work, and what approach you’d like to take to stepping away.
For example, do you want to stop working altogether or reduce your hours and move towards part-time work?
The aim here isn’t to lock anything in. It’s simply to have a clearer sense of what you’re working towards, so you can tell whether your current set-up is helping you move in that direction or whether it needs tweaking.
The key question is simple: Are you broadly on track, or is it time to make a few adjustments?
Rethink your mortgage strategy
In your 50s, your mortgage often shifts from something you’re actively managing day-to-day to something you’re thinking about in terms of how and when you want it out of the way.
That might mean being more intentional about paying it down. For some people, it’s about setting a clear goal to be debt-free by a certain point, while for others it’s about building more flexibility into repayments as retirement starts to come into view.
You can also make better use of the tools you already have, like making extra repayments when you can or using an offset account more deliberately to reduce interest while still keeping access to your money.
The focus is not just saving interest but reducing the amount of financial pressure you might carry into the next stage of life.
Fine-tune your super
It’s worth taking a closer look to make sure your super is still working the way it should for you. Over time, it’s easy for things to drift without you noticing – whether that’s multiple accounts building up, fees creeping higher than they need to be or investment settings that no longer match your approach.
It also helps to take a step back and look at the bigger picture, including how your super has performed over time and whether your investment option still suits where you are now in terms of timeframe and comfort with risk. Some people find they’ve become more cautious over the years without realising, while others are still taking on more risk than they actually need.
Nothing too complicated here, just making sure things haven’t drifted over time in a way that could hold you back later on.
Top up super in a more strategic way
If you’re in a position to add more to super, this is also where certain contribution strategies can become more useful than in earlier decades.
You can still use salary sacrificing or make one-off personal contributions, but there are also more options you might consider if you’ve received a lump sum, such as from an inheritance or selling a major asset.
For example, you may be able to bring forward up to three years’ worth of non-concessional contributions and add them to super in a single year. It can be a useful way to boost your balance without being limited to the usual annual caps.
At this stage, it’s often more about being intentional with how you use the available rules, rather than just contributing in a steady, set-and-forget way.
Think about investing outside super
For some people, it can also make sense to have investments outside super.
This might include things like ETFs, shares or property and simply gives you more flexibility, since the money isn’t locked away until retirement. It can also help if most of your long-term savings are already sitting inside super.
It doesn’t need to be complicated – it’s really just about whether having money in different places gives you more options as you move into the next stage of life.
Stress-test your budget
This is a good time to test how your finances would hold up if things changed. For example, if interest rates went up again, if your income changed, or if you chose to work less in the future.
You don’t need to plan for every scenario, but it helps to know you’d still feel comfortable if things didn’t go exactly to plan.
If you do spot any areas of concern, think about making a few adjustments that can help reduce pressure if things change.
Get your affairs in order
Take the time to make sure the practical side of things is up to date.
That includes your will, an enduring power of attorney and any other important documents.
It’s not something you have to think about often, but it’s important that what you’ve set up still reflects your current situation and that any documents are easy to find if needed.
Also remember that super doesn’t automatically form part of your will. That means you should check your binding nomination is current so your super goes to the people you intend.
You should also look at any insurance you still hold. If your mortgage is smaller or you no longer have kids to support financially, you may not need the same level of cover you once did.
It may make sense to simplify or reduce cover if it’s no longer right for your situation.
Think carefully about this, as getting cover again can be harder or more expensive as you get older.
Consider getting a second opinion
By your 50s, you’ve usually built a fairly established financial position.
A professional adviser can sense-check how everything is working together, that nothing important has been missed along the way and whether you’re still on track.
Or you might prefer more regular support as you get closer to retirement.
3 simple money wins:
1. Use any extra cash to reduce debt or boost your super.
2. Do a quick “what if” check to see how things would look if your income dropped or rates rose.
3. Put together a simple “when I die” file with key documents and account details.
This article originally appeared in Money Matters by The Australian Women’s Weekly. Purchase here.
Information is correct at the time of writing. Any advice provided is general in nature and does not take your personal circumstances into consideration. Readers should seek their own financial advice.
