Running out of money is one of the most dreaded things you hope doesn’t happen when you retire. With a limited income stream, which used to come from wage and employment opportunities, it is quite impossible to rebuild your wealth once you enter retirement.
Here are some strategies to help you ensure you won’t outlive your wealth and to have a greater chance that it lasts a lifetime.
Plan before you retire
First, you have to understand the possibility and risk of running out of money. It could happen to anyone, especially those who had set aside planning before they retire for far too long. The earlier you get on it by preparing a plan, the easier it is to be avoided because time is on your side.
You can grow your wealth through making regular contributions to your superannuation over a long term. Make a habit of putting money from any source possible, such as your tax refund, work bonuses, or other windfalls into your super each year. Use the calculators on your superannuation fund’s website to determine how much you’ll make with those extra contributions.
Know how much you need when you retire
It has happened that most Australians underestimated their income needs in retirement and the costs they would incur. Working out how much you might need in retirement early on is an important factor in your retirement planning process. Your super or bank websites have calculators where you enter what income you’ll likely get, then it comes up with the retirement total that you need.
Predict how long your retirement will be by looking at the history of your family’s life expectancy, then add a few years to be sure. Approximate the cost budget including the travel budget, which can be blown out in the beginning of retirement, as well as the health budget in the latter years of retirement. A rule of thumb is to create a budget at around 85% of your income pre-retirement.
Review your investments regularly
On average, most Australians invest in their home, super, and a portfolio of shares, either directly or through managed funds. Review your investments regularly every 6-12 months, rather than every week.
Make sure to constantly monitor the performance of your investments against other comparable options and the fees being charged. Avoid chop and change, however, be aware of which underperforms and drags down returns.
Also, take chances on your investments earlier so you have time to recover from setbacks, then become more conservative later on.
Consider your spending and financial emergencies
With limited savings, superannuation, and government pension, it has never been more essential to live within your means. As you improve your spending habits, the more money saved for your financial security.
Financial emergencies, from car repairs to incurring illness, can happen any time and can have a devastating effect on your wealth building plans. Considering these urgent expenses can make you realise that having a buffer for the unexpected is always better than none.
Apart from insurance cover, you should set aside six months worth of salary to counter these financial emergencies. You can put the amount in your investment portfolio or in a facility that earns a return while not being used.
How the ASAG Reverse Mortgage can help unlock your wealth
If you’re a senior homeowner in Queensland needing funds for retirement, our equity release facility could be the right suitable solution for you. The wealth that you’ve built up in your home is just waiting to be unlocked so you can use it for your objectives in retirement.
The ASAG Reverse Mortgage in Queensland is simply a loan designed for homeowners who are 60 and over, allowing them to access equity in their home and move it towards their finances without selling their property. They are free to draw down their funds as either a lump sum, regular instalments or a cash reserve to be used for any purpose, including Retirement Planning.
The ASAG team can help you with more details on how our reverse mortgage works. Our lines are open on 1300 002 724 and at email@example.com so give us a call or send your enquiries about our equity release solutions.
To get started, you may also use our free tool below to assess the available equity in your home.