One of the biggest misconceptions about retirement is that in order to have enough to last the distance, you need to have accumulated a significant amount during your working life.
While this is in fact true, it’s not the complete story.
In addition to your super, you can continue to generate an income in retirement to create a steady cashflow. And there’s other benefits too.
By continuing to accumulate wealth, you’ll not only place less pressure on your retirement savings to keep up with the rising costs of living, you’ll also help to safeguard your money from external factors such as market volatility.
So, if you’re wondering what retirement income strategies are available that you could consider implementing depending on your circumstances, here’s three.
Learn more about investing your wealth or speak to a financial adviser.
- Manage your retirement income spendingManaging your spending in retirement sounds like a no brainer, but it’s not uncommon for retirees to access too much of their savings too soon.
Having a retirement income strategy that controls how you drawdown on your savings, may help to ensure your money lasts the distance.
And it doesn’t necessarily need to be complicated. Using an online calculator to understand how long your money will last, and then keeping an eye on what you’re spending, is a great starting point.
- Keep your retirement income in line with inflation
Most people are now living to around 851 years of age which leaves roughly 25 years in retirement. To maintain your current lifestyle throughout this period, your retirement income will need to keep up with the rising costs of living.Having a conservative investment portfolio – primarily focused on low growth assets like cash – will certainly help to protect you from market volatility and short-term losses. However, it may not be enough to keep pace with inflation.
Diversifying your investment portfolio to include both low and high growth investment options, may help to even out your risk and return ratio so you continue to grow your capital (original investment).
If you are considering diversifying your portfolio, working out how to do this well does take some effort so you may want to seek professional financial advice. Alternatively, investing via a managed investment fund provides access to a broad range of assets or markets without having to do the background work – this is taken care of by investment managers. There are fees associated with this approach however, which are usually set out in the relevant Product Disclosure Statement.
- Use Government benefit entitlements to help boost your retirement income
You may be able to receive the Age Pension depending on how much income you generate from other sources like investments and what your assets are worth.2 If your income or assets exceed a specific threshold however, your pension payments will be reduced or you may not be eligible to receive these benefits.
Concessions and health cards
Even if you don’t receive the Age Pension, you may be able to access other government benefits to help boost your retirement income. This includes things like travel concessions, reduced rates on prescription medicine and other health services as well as reduced council/water rates.The Department of Human Services also offers loan options if you’re unable to access this via a bank.3
There are additional income tax offsets which may also be available to you depending on your age, income and eligibility for government pensions. These enable you to earn more income without paying additional tax.4
Consider financial advice for managing your retirement income
If you’re unsure about whether you’ll have enough income in retirement, a financial adviser can help you formulate a plan. This may include strategies to help you generate more retirement income or may help you reduce your tax. Better still, they may find ways to help you retire early depending on your circumstances.
A steady source of income in retirement is possible, but it takes planning. Being able to save diligently, invest with diversification in mind, and utilise government concessions available to you, may help to ensure you continue to grow your retirement savings to keep pace with inflation.