Since people are living much longer these days your retirement money may need to last you 30 years or more. Financial Mappers can help to calculate and plan how long your retirement funds will last. Here are some other ways to maintain or generate income once you retire.
1. Seek Advice Early On
Growing your capital so it lasts the distance is imperative if you want your money to meet your future needs in retirement. Meeting with a financial advisor can be a smart idea if you’re unclear about investment strategies. They can advise you on the safe options for investing, the potential risks, and what schemes to avoid.
2. Diversification is Key
An important factor in building an investment portfolio that grows over time is diversification. This means not allocating all your money to one type of investment but putting it into a mixture of investments such as shares, property, bonds, fixed interest, and cash investments. Spreading your funds over these different sectors, and in both growth and low-risk assets, lessens the risk of losing capital to market fluctuations and inflation.
3. Property to Generate Income
Downsizing the family home is a common way to release funds to boost retirement income. Buying a rental property is also a popular way to invest money in the years leading up to retirement. For many people owning a rental property is easier to understand and a less scary form of investment than the share market. Property generally increases in value over time and can be sold at a profit if assets need to be liquidated in retirement. Like any form of investment property has its risks, such as tenants who don’t pay their rent or being unable to find tenants. You also need to factor in extra expenses such as maintenance, and property management fees if you don’t want to be a hands-on landlord.
4. Manage Your Outgoings
According to the Association of Superannuation Funds of Australia (ASFA), in 2016, a single retiree needs $450 a week to live modestly and $817 a week to live comfortably. For couples, the figures are $648 and $1,119 respectively. Your retirement fund will largely dictate your lifestyle but even if you’re living a comfortable lifestyle you’ll need to keep your expenses in check. Financial Mappers has a budgeting feature that helps you monitor your personal spending so you can keep on track. These figures are updated each year on the ASFA website.
5. Carry on Working
If you enjoy your job you’re perfectly entitled to keep working past retirement age. Working past 65 has financial benefits such as being able to qualify for a part Age Pension (which has travel, medical and utility concessions) and adding to your self-funded retirement nest egg. You may also be eligible for a Work Bonus, which is a government incentive for people to stay in the workforce past the pension age.
Financial Planning Software for Retirement Planning
Financial Mappers is a personal finance tool that assists with managing your retirement funds so you can strategically plan your retirement lifestyle and most importantly have control over your spending to make your money last, even if it’s for the next 30 years. Find out more about spending your assets to generate funds in Asset Planning for Retirees.
Glenis Phillips SF FIN – Designer of Financial Mappers
Further Reading
Here are some additional articles I have found for you:
- How much super will I need? (Super Guru)
- How much money do you need to retire? (ABC News)
Disclaimer: Financial Mappers does not have an Australian Services License, does not offer financial planning advice, and does not recommend financial products.
