David & Libby Make sure it lasts a lifetime
Avoid a shortfall in your retirement funds with these strategies to ensure the money doesn’t run out before you do
IT’S one of those financial nightmares we all hope doesn’t come true – running out of money in retirement.
Outliving your wealth adds an unwelcome level of stress at a time when you’re financially vulnerable. Without a regular income stream from a wage, and limited employment opportunities, it is near impossible to rebuild.
Here are our top seven strategies to ensure your wealth lasts a lifetime ... or longer.
PLAN, PLAN AND PLAN
process. Your superannuation or bank websites have retirement calculators where you punch in what you think you’ll need in income and up comes a retirement total.
A word of warning here. It’s our experience that most Aussies seriously underestimate their retirement income needs and the costs they’ll incur. So be conservative.
Work out how long you’ll be retired, an approximate cost budget and do the maths. Remember the travel budget of most retirees blows out in the early years as does the health budget in the latter years of retirement.
A general rule of thumb from the experts is to plan a budget at around 85 per cent of your pre-retirement income. Assume social security support as a back-up safety net, rather than a central plank of retirement funding, because it will be increasingly difficult to be eligible for the age pension.
CONSTANTLY REVIEW YOUR RETIREMENT INVESTMENTS
major car repairs and replacing the fridge. But an unexpected financial event can have a devastating impact on your wealth building plans.
Apart from appropriate insurance cover, a lot of experts suggest putting aside six months worth of salary to counter unexpected financial shocks. Put this amount in your investment portfolio or in the redraw facility of the home loan so that it is always earning a return while not being used.
WATCH SPENDING AND CONSIDER DOWNSIZING