Make your retirement savings go further with these handy tips

You’ve worked hard all your life and are looking forward to enjoying a comfortable retirement. How can you be sure that your savings will last?

The good news is that with life expectancy constantly rising, you can now expect to enjoy 20 years or more as a retiree[1]. But with Australians spending almost a quarter of their lives in retirement, you want to make sure that your savings are going to last the distance — without cutting back your lifestyle.

One of the most important steps in your retirement planning is figuring out how much you’ll need to spend each year to support your desired retirement lifestyle. However, many people struggle to plan for the various stages of spending that they may require as they move through retirement.

Chart 1 shows how retirement spending can change over time. Many people spend a lot initially, supporting their new lifestyle, before settling into a simpler life. As we age, accommodation and medical costs tend to rise.

So what can you do to make the most of your retirement savings? Here are three quick tips to get you started.

1.   Consider your investment options

When it comes to your investments, to help your savings last, consider choosing assets with an opportunity for some long-term growth. That way, your nest-egg can keep earning, even while you draw money to live on. While you probably want investments that will provide you with added income for your retirement, it’s worth thinking about diversifying your portfolio — for example, with managed funds that balance growth potential with income — so you can maximise your returns down the track.

2.   Maximise government benefits

Are you getting the benefits you deserve? You may be entitled to more than you think. As well as the Age Pension, you may be entitled to apply for a Seniors Card which will give you discounts for certain businesses and public services. Depending on your situation, you may be entitled to other extra benefits — like if you are a veteran or are caring for your spouse.

You might also be able to enjoy tax offsets, depending on your tax and income. And if you are thinking about moving into an aged care facility, make sure you carefully go over your Resident Agreement so you understand your fees, rights and responsibilities — and seek advice on the best way to structure your finances and affairs.

3.   Keep your money in the super system

Once you turn 60 and are able to access your super, it can be tempting to cash out your savings and invest the money into property or other investments. But before you make that decision, it’s worth considering using your super to draw a pension. A super pension allows you to take out your super as a regular income — and the good news is, it’s 100% tax-free. This means that you’ll benefit from a steady annual income — and save money on tax.

Ask the experts

To find out more ways to avoid a lifestyle crash in retirement, seek financial advice.

Disclaimer

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.

Soundbridge Pty Ltd trading as, Soundbridge Financial Services are Authorised Representatives GWM Adviser Services Limited ABN 96 002 071 749, trading as MLC Financial Planning an Australian Financial Services Licensee, Registered office at 105 –153 Miller St North Sydney NSW 2060 and a member of the National Australia group of companies

 

This information has been prepared by GWM Adviser Services Limited ABN 96 002 071 749 AFSL 230692, a National Australia Group Company, 105-153 Miller Street, North Sydney NSW 2060 Australia.

 

[1] Australian Bureau of Statistics 2014.

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