Want to be financially free by 55?
The answer might surprise you, and the earlier you start, the better you'll be off.
The Traditional Approach to Retirement Planning
When I first started in financial planning, most clients didn't seek advice until they were in their 50s. By then, the mortgage was nearly paid off, the children had finished school, and suddenly the question arose:
"We've got 10 or 15 years until retirement, what should we do?"
And to be fair, you can still achieve plenty in that timeframe. Ten to fifteen years is a long time in financial planning.
The New Generation of Wealth Builders
But things have changed.
Today, I'm seeing doctors and dentists in their 20s and early 30s asking a different question:
"How can I accelerate my wealth creation so I'm financially independent by 55?"
That's a significant shift in mindset. Instead of waiting until the traditional retirement planning age to start thinking about it, they're taking action decades earlier.
And the difference that makes? It's enormous.
Three Keys to Accelerating Your Wealth Creation
Whether you're just starting your career or you're well-established, here are three principles that should guide your retirement planning:
Automate Your Wealth Creation
The most effective wealth-building strategy is one you don't have to think about every month.
Set up automated contributions to:
Your mortgage (to be debt-free by a target age)
Superannuation (including additional concessional contributions)
Investment bonds or exchange-traded funds (ETFs)
Automation removes the temptation to spend first and save later. It ensures that as your income grows, your wealth grows with it.
Pro tip: Review your savings rate annually. As your income increases, your automated contributions should too.
Invest Appropriately for Your Time Horizon
Saving money is only half the equation. Where you invest it matters just as much.
If you're investing for 20, 30, or 40 years, you need to think about:
Asset exposure: Are you maximising growth potential, or is too much sitting in cash?
Risk tolerance: Are you comfortable with the level of volatility in your portfolio?
Diversification: Are you over-weighted in one asset class (e.g., property) at the expense of others?
A well-diversified portfolio aligned to your goals and timeline will serve you far better than a reactive, ad-hoc approach.
Minimise Tax and Fees
This is particularly important for doctors and dentists, who often face marginal tax rates of 47%.
Every dollar lost to unnecessary tax or excessive fees is a dollar that isn't compounding for your future. Pay attention to:
Tax-effective structures like superannuation and investment bonds
Investment fees, even small differences add up over decades
Franking credits and other offsets that can improve your after-tax returns
Net returns are what matter. A 7% return with 2% in fees and taxes is very different from a 7% return with 0.5% in costs.
So, When Should You Start?
The short answer: now.
Whether you're 28 or 58, the best time to get serious about your retirement planning is today. The earlier you start, the more time your money has to compound, and the more options you'll have down the track.
If you're keen to accelerate your wealth creation and want a clear plan tailored to your situation, we'd be happy to help.
Yves Schoof
Director & Principal Adviser | Affluence Private Wealth
