Help your retirement funds last the distance
Retirement is a time that many Australians eagerly anticipate,
providing plenty of time to pursue hobbies, do more travelling, or simply kick
back and enjoy the fruits of your labour. We will outline key strategies to
help boost and preserve your retirement savings, to help you achieve longterm
financial security throughout your golden years.
It’s never too early to start saving
When you’re in your 20s or 30s, retirement could scarcely be further
from your mind, which is understandable. However, not giving it due
consideration is to miss an opportunity to ensure that your retirement could be
a very comfortable one.
The power of compounded returns cannot be overstated and the longer
your funds have to grow, the better.
Take advantage of super accounts, which offer tax advantages when
making additional contributions. Contributing even a little more to your
superannuation fund than the legally mandated amount throughout your working
years can significantly boost your retirement savings.
Diversify your investments
Diversification is a fundamental principle of successful investing
and it is important during retirement, as you most likely will not have the
same earning potential you had during your working life to recover any losses
incurred from investments.
Spreading your investments across different asset classes, such as
shares, bonds, real estate and international investments helps mitigate risks
and protects your portfolio against market volatility.
Setting up an investment portfolio can be fairly straightforward if
you do a little research but if you don’t feel comfortable doing so
independently, consult with a financial expert. They can help you design an
investment strategy that’s aligned with your risk tolerance and financial
goals.
Create a realistic budget
To make your retirement funds last, create a realistic budget and
stick to it. Work out your total ongoing expenses, such as housing, healthcare,
utility bills and daily living costs. Factor in discretionary spending for
travel, hobbies and entertainment.
Be mindful of your lifestyle choices and ensure your expenses fall
within your available resources. Consider tracking your expenses using
budgeting tools or mobile apps to monitor your cash flow and identify areas for
potential savings.
Minimise debt
Carrying debt into retirement can place a significant strain on your
finances. Prioritise paying off high interest debt, such as credit cards and
personal loans, before retiring.
Minimising (or better still, eradicating) debt not only reduces your
financial obligations but also provides peace of mind.
Develop a debt repayment plan and consider working with a financial
expert to manage your debt management strategy, so you can minimise the amount
of interest you have to pay.
Consider longevity and healthcare costs
Increased life expectancies mean retirees need to plan for the
potential of a longer retirement. Medical expenses can be a significant
financial burden, so you must factor in healthcare costs when planning for
retirement.
Research and understand your healthcare options, including Medicare
and any private health insurance. Consider setting aside funds specifically
designated for healthcare expenses, including longterm care, to ensure you are
adequately covered for any medical needs that may arise.
Continuously monitor and adjust
Financial planning doesn’t end when you retire. Regularly review and
adjust your investment portfolio based on changing market conditions and your
evolving financial goals.
Stay abreast of new investment opportunities and seek professional
advice when needed. Monitor your spending patterns and adjust your budget, as
necessary.
Keeping a proactive approach to your finances will help ensure that
your retirement funds are being utilised optimally.
Downsize or relocate
Consider downsizing your home or relocating to a more affordable
area to reduce housing expenses and potentially free up extra funds for
retirement.
Part time work
Many people prefer not to have a complete full stop on their working
life, instead opting to continue working on a part time basis. For some, this
may be an economic necessity to bolster their income, while for others, they do
so just to keep active and productive.
Whatever your situation, exploring part time work opportunities
during retirement can supplement your income and reduce the amount you need to
withdraw from your savings. If you are on the government pension, you can earn
a certain amount of income before your pension is impacted.
Prepare for unexpected expenses
Set aside an emergency fund to cover unexpected costs during
retirement, such as home repairs. This will help prevent you from dipping into
your retirement savings.
Stay informed and adapt
Stay updated on changes in tax laws, retirement policies, and
economic conditions that may impact your retirement savings. Be prepared to
adjust your strategy accordingly to make your savings last.
Making your retirement funds last the distance requires careful
planning, discipline and adaptability. By starting early, diversifying your
investments, creating a realistic budget, minimising debt, considering
healthcare costs, and continuously monitoring your finances, you can set
yourself up for longterm financial security.
Seek professional advice from financial planners and stay informed
about the latest retirement strategies.
Source: MLC