04 Apr Make the most of your retirement money
Retirement is your opportunity to reap the benefits of all your hard work. Moving into the exciting retirement phase of your life, you’ll want to make your savings work for you and last for the long haul so your family doesn’t have to face your unexpected living costs.
Expect to live longer
With the average life span around 80 for men and 84 for women in Australia1, many retirees run the risk of outliving their savings. The good news is you can now expect to enjoy twenty years of retirement or even longer2 – this is why planning is so important.
The ASFA Retirement Standard estimates that a couple needs $58,326 per year for a comfortable retirement, or $42,597 per year for a single person3. So in order to determine how comfortable a retirement you can afford, planning is pivotal. On top of your basic needs like food, housing and clothing, you should also factor in extra for any intended travel and leisure, and budget accordingly.
Maximise your benefits
Depending on your income and assets, and how they’re structured, you may be eligible to receive other government benefits, such as the Age Pension or the Commonwealth Seniors Health Card. These can go a long way to reducing your reliance on your own savings, so it’s worth ensuring you’re making the most of your entitlements.
Invest for extra income
Your money needs to last for the duration of your retirement, so it’s important to get the right investment mix. The most appropriate way for you to invest your savings will depend on a number of factors, including how much you have accumulated versus how much you will need to fund your retirement lifestyle, as well as your tolerance to risk and volatility.
You may want to consider some lower risk investments that provide stable returns in the short term however, it may also be worth including growth assets in your portfolio, to help the value of your savings keep pace with inflation, and provide potential for longer term growth.
1. Australian Institute of Health and Welfare – http://www.aihw.gov.au/deaths/life-expectancy/
2. Australian Bureau of Statistics, 4125.0 – Gender Indicators, Australia, Feb 2014