Guest Blog: Make your retirement income last as long as you do

Do you have enough to retire on? How much even is 'enough' to retire on? Will your retirement years be free of financial worries, or will you struggle to make ends meet? How can you ensure your 'nest egg' will last the distance? 

Picture this: you've just retired from your last ever day of work, picked up your last pay cheque, and suddenly the realisation

hits you – all you have to rely on to fund your entire retirement, travel plans, emergencies and that new boat you want is your superannuation and savings. What if the money runs out too soon? How do you know if it's enough to do the things you've been looking forward to, as well as buying the groceries and paying the bills? It's hardly surprising that many retirees are more than a little nervous about their financial security when faced with this situation.

How much is enough?

It can be really hard to work out how much you'll need to live on for your entire retirement, but to maintain the same standard of living you have had, you'll probably need about 60 – 80 per cent of the annual income you earned before retirement.

When determining how much you need, you also have to consider:

your (and your spouse's) probable lifespan;

the rate of investment return you can reasonably achieve;

the rate of inflation;

the type of lifestyle you'd like to maintain;

the amount of tax you have to pay; and

other sources of income.

What to invest in?

Interest bearing and capital guaranteed investments tend to be the most secure investments, such as cash or savings accounts, government bonds, savings bonds, and fixed term trusts.

These types of conservative investments, despite being secure, often produce a return of roughly 2-6%, which may not be enough income to satisfy your needs when you invest your lump sum in them.

Higher, long-term returns and greater capital growth can be attained from investments such as shares or property, and shouldn't be ignored. For producing regular income for day to day expenses, you can invest in tax effective account based pensions, unit trusts, and bank, building society or credit union accounts.

Making your money last longer

If you've done the maths and you don't think you will be able to finance the lifestyle you'd like, and if continuing full time employment isn't an option, you'll need to make your money last longer. How can you do this? Here's a few options:

  1. Spend less – re-work your budget and look for ways to cut back your expenditure;
  2. Pay less tax – your financial planner or accountant can help you pay as little tax as possible, and make sure you're claiming all deductions you can;
  3. Establish whether you have any right to government & Centrelink entitlements;
  4. Achieve better investment returns – monitor your investments (in conjunction with your financial planner) to tighten up your portfolio and produce better returns without increasing your risk; and
  5. Supplement your income with part time work – a few hours' work each week could make a substantial difference to your budget and may not even affect your pension.

If you've just retired, or you're approaching retirement, one of the best decisions you can make is to discuss your plans with a qualified financial adviser, who can help you make sure your retirement dreams become reality. Here at Wealtheon, we can help you become more aware of the importance of creating a secure financial future for your retirement.


For further information, contact Kris, authorised representative of Lifespan Financial Planning, on 1800 577 336 or email This email address is being protected from spambots. You need JavaScript enabled to view it.. You can check out the Wealtheon website at https://www.wealtheon.com.au/home


Disclaimer
Kristopher Meuwissen is an Authorised Representative No: 466483 of Lifespan Financial Planning Pty Ltd AFSL: 229892. The purpose of this document is to provide general information only and the contents of this document do not purport to provide personal financial advice. Wealtheon strongly recommends that investors consult a financial adviser prior to making any investment decision. The contents of this document does not take into account the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making any financial or other decisions. The information is selective and may not be complete or accurate for your particular purposes and should not be construed as a recommendation to invest in any particular product, investment or security. Lifespan and its Authorised Representatives do not accept any liability for any errors or omissions of information. The information provided on this document is given in good faith and is believed to be accurate at the time of compilation.

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