Thinking about retirement can be overwhelming, especially if you’re still raising children or supporting them in college, caring for elderly parents and working. Managing your finances now and looking ahead to financial freedom during retirement is a big load. That’s why we talked to an expert on the subject.
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James McFall is a certified financial planner (CFP) who is the founder, managing director and senior financial advisor of Yield Financial Planning. He has been in the financial industry for over 20 years.
He’s helped hundreds of people plan and manage their finances, so they can live the life they want, both now and well into retirement. His expertise includes retirement planning, tax structuring, investing in shares, property and debt markets, debt restructuring and more.
Here are his 10 tips for balancing family, finances and freedom in your retirement.
The first step to finding financial freedom in your retirement, while finding time for family, is to figure out what it is you want.
“Before diving into the financial side of retirement, pause and ask yourself: ‘What does the best version of retirement look like for me?’ When I talk with my clients about retirement, I ask them to imagine their ideal lifestyle with no compromises,” McFall said. “Because if there ever comes a time when choices need to be made, having a clear picture upfront makes it easier to prioritize what truly matters.”
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More than one-third of employees in the private sector don’t have a retirement plan.
“This is where setting clear and realistic retirement goals becomes so powerful,” McFall explained. “Think about both your short-term desires, like taking that long-awaited trip across Europe and your long-term ambitions, like leaving a financial legacy for your family or staying financially independent for as long as possible.”
Now that you have a vision, McFall wants you to get a clear plan written down.
“To understand what it will take to fund them and where you currently stand,” he said. “Start by looking at your income, expenses, assets and liabilities. How much does your lifestyle cost today? And what might change in retirement?”
These questions are critical to move forward with a plan.
“As you outline your living costs, account for unavoidable expenses like housing, food, clothing, utilities, transportation, insurance and healthcare,” McFall added. “Then think about what you want, like holidays, supporting your children, car upgrades and entertainment.”
“Defined-contribution plans are one of the most powerful tools for funding your retirement and it’s designed specifically for that purpose. It’s also incredibly tax-effective, which means more of your money stays with you in retirement,” McFall explained.
“You can make different types of contributions, like concessional (pre-tax), non-concessional (after-tax), spouse contributions, catch-up contributions and downsizer contributions. Understanding how to use them can significantly boost your retirement nest egg,” he added.
“Also, knowing when you can access your super is just as important. While everyone can access it once they turn 65, you may be able to access it earlier if you’ve reached your preservation age and have retired,” he said. “For many people approaching retirement in the next few years, this age is likely to be 60, depending on their birth year.”
Figuring out these defined-contribution plans and how they will benefit you will pay off tremendously in your retirement years.
One big problem for many is that they have a single income stream. When that dries up, you’re in trouble.
“I always remind our clients that retirement isn’t just about having savings, it’s about having a strategy to turn those savings into income,” McFall said.
Contributing to retirement plans is a key pillar, but it’s not the only option. Depending on your situation, SMSFs, companies, trusts, joint investments or business structures can help you manage tax effectively, diversify your holdings and protect your wealth.
As you approach retirement years, it’s time to start thinking outside of the box.
“Diversifying your investments can help create multiple sources of income,” McFall explained. “Managed accounts, shares, property, ethical investments, managed funds and ETFs are all strategies that can help you maintain financial stability while allowing your portfolio to grow over time.’
The right mix of income streams will ensure you enjoy freedom and family with financial independence to boot.
But what about taxes? McFall covers us there, too.
“Whether you’re still building your wealth or already thinking about retirement, having a smart tax strategy can make a big difference to your long-term financial outcomes,” he said.
Tax structuring simply refers to how your assets are owned and what legal structure they sit in.
For instance, are your investments in your name? Shared with your partner? Held through a family trust, a company or inside your super? Each of these setups has different tax rules, advantage and disadvantages.
These are conversations you should be having with your family, with your estate attorney and with your accountant, of course.
“Especially once you hit the retirement phase, where earnings can even become tax-free,” McFall added. “Trusts give you the flexibility to share income between family members. Companies can help you lock in a fixed tax rate. And holding assets jointly with your partner might work well if one of you is on a lower tax rate.”
You want to think now about how to structure your taxes during retirement best. You’re usually better off paying taxes now, so you won’t have to pay later when you’re on a more fixed income.
You’re not just saving and cutting taxes, however. You also want to get clear of all the debts you can, without sacrificing your wealth.
“Instead of putting every spare dollar into debt, consider combining repayments with smart investment and tax strategies. For example, selling an asset to pay off debt might be a good move,” McFall explained. “But is it the right time? If yes, it could reduce your capital gain tax. Likewise, consider using an income-generating investment to help you cover repayments without eating into your savings.
Also, don’t underestimate the power of debt restructuring. Refinancing or consolidating debt can reduce your interest costs. And if you haven’t already set up a proper repayment plan, now is the time. Focus on clearing high-interest debt first, but also think about whether any of your debt is tax-deductible. That can make a real difference to what they’re actually costing you in the long run.”
The goal isn’t just to be debt-free. It’s to be in control of your money, including your debt. You want to head into your retirement with more freedom and flexibility.
If you’ve been living large, you might want to reevaluate that lifestyle. Why?
“Downsizing can be a great way to free up cash, simplify your lifestyle and better align your living space with your retirement goals,” McFall said. “While your home holds sentimental value, it may no longer suit your future plans or budget.”
Here’s how McFall explained downsizing can support you:
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Free up equity to boost your super or fund your lifestyle.
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Lower ongoing costs like maintenance, utilities and rates.
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Access tax-free super contributions of up to $300,000 per person through the downsizer scheme.
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Move into a home that better suits your needs, maybe closer to family, health facilities or something easier to manage.
It’s not just about moving to a smaller home; it’s about making space for the lifestyle and financial freedom you truly want in retirement.
The bottom line: if you don’t need it and you don’t use it, why do you still have it if it’s costing you money?
While we all dream of being the picture of health well into our golden years, it doesn’t always work out that way.
“Old age care might not be the first thing when planning for retirement, but it really should be. The costs can add up fast if you need support at home or a residential care facility,” McFall said. “There are daily fees, means-tested charges and accommodation costs, which can really add up and affect your finances. So, planning early can help you avoid unexpected stress.”
According to the Office of the Assistant Secretary for Planning and Evaluation, 70% of people who reach age 65 will end up requiring some type of elderly assistance, often long-term care.
“Rather than leaving it to chance, take the time now to understand what’s coming,” McFall said. “That way, you’ll be in a better position to make smart decisions that suit your needs and lifestyle.
“Estate planning isn’t just about having a will; it’s about making sure your wishes are clear, your loved ones are looked after and your legacy is protected.”
McFall said a good estate plan can help you:
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Decide who gets what (and when)
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Reduce tax for your beneficiaries
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Avoid family disputes
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Make sure your super and insurance go to the right people
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Appoint someone you trust to make decisions if you can no longer
“It’s not the easiest conversation to have, but sorting it now means peace of mind for you and less stress for your family later,” he added.
You’re better off having too much insurance as you age than not enough. Why?
“Retirement planning isn’t just about growing your money and ensuring it’s protected. Let’s be real: things don’t always go to plan,” McFall explained. “A sudden health issue or an accident can disrupt your life in ways you didn’t see coming. That’s why having the right insurance in place is so important. Also, as your situation changes, it’s worth reviewing your policies to make sure they still suit your needs and give you good value.”
Here are some key types of insurance to consider:
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Income Protection Insurance (IP): If you’re unable to work due to illness or injury, this can help cover your regular expenses with a monthly benefit until you recover.
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Trauma Insurance: Pays a lump sum if you’re diagnosed with a serious condition, like cancer, stroke or a heart attack.
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Total and Permanent Disability (TPD): Provides a lump sum if you can’t return to work permanently. It can help with things like medical costs, adjustments to your home or ongoing bills.
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Life Insurance: Gives financial support to your family if something unexpected happens to you.
Finally, remember you’re not alone.
“Retirement planning comes with a lot of decisions and it’s completely normal to have questions, whether it’s about retirement plan contributions, investments, tax, old age care or estate planning,” McFall said. “That’s where speaking with an experienced financial advisor can make a difference.
“Investment markets, tax laws and government benefits don’t stay the same and what works today might not be relevant next year or in five years. At the same time, no two retirements are the same. So, advice that’s right for someone else may not be the best fit for you,” he added.
Work with an advisor who understands the retirement landscape and takes the time to listen, understand your goals and create a plan tailored to your unique situation.
With the right support, you can feel more confident in your decisions and focus on enjoying the retirement for which you’ve worked hard.
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This article originally appeared on GOBankingRates.com: 10 Tips for Balancing Family, Finances and Freedom in Your Retirement
