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10 financial tips & tricks for retired Aussies

10 financial tips & tricks for retired Aussies

Your retirement years should be some of the most peaceful, enjoyable and rewarding; but it doesn’t always happen that way. Without a solid financial plan, you can find yourself living a stressful lifestyle that falls short of your expectations.

Apply these financial tricks and tips in the lead-up to your retirement to enjoy a more financially-secure time.

1. Have a plan and work to it

According to television presenter and finance journalist David Koch, there’s nothing more critical than having a realistic financial plan and working to it when it comes to avoiding running out of money in retirement.1 Running out of money is a real possibility with Aussies living longer than ever before. The earlier you have a workable plan to help you maintain your retirement nest egg, the sooner you can start putting the magic of compound interest to work for you.2

Little things like adding a percentage of your freelance income to your retirement fund, and saving a little extra each week can make a considerable difference over the long term.1 So define what you want to achieve, understand how much you need for retirement, and put your plan to work today.

2. Take charge of your retirement plan

If you have a combined retirement plan with your partner, make sure you’re both involved in the key decisions and you’re both on the same page with your budget and long-term plan. Only by taking charge and knowing where you’re going can you direct your own financial strategy in retirement.

3. Regularly check in with your finances

The responsibility for your finances lies with you and you alone. Don’t leave the responsibility to someone else – even if it’s your partner or financial planner. Make sure you know exactly how much money you have, and check up on your investments, superannuation, and other assets and property when you want to, rather than having to go through your accountant or adviser.

If you’re retired, it’s likely you’ve already worked out a plan for ensuring you have enough money to sustain you. However, keep in mind that anyone’s circumstances in life can change quickly, so commit to regularly checking in when it comes to your finances.

Experts suggest you check your super balance at least quarterly.3 You can consult a financial planner and/or use a retirement calculator.

Whether you’ve had some unexpected costs, underestimated your expenses for a period or gained through a windfall, re-evaluate what’s happening to your financial picture so you can save more, invest wisely, and explore other options to preserve and build wealth.

4. Understand how you’re taking money out of super

Your financial plan should include a sensible strategy for taking money out of super.1 If you haven’t already worked how you’ll be taking money out of super, but are making your withdrawals in a haphazard way, it’s time to rethink what you’re doing.

Ideally, you should talk to your accountant or financial adviser about how you’re approaching your super withdrawals. This should be considered in the context of tax, your retirement lifestyle, other investments and income streams, debt levels, spending habits, and future goals in retirement. How you take money out of super can be critical to whether you run out of money or not in retirement.1

5. Make living within your means a priority

It can seem like obvious advice, but it’s important to recognise how critical it is to live within your means when you’re no longer generating an income from employment. Unless you’re a high-net-worth individual or you have a generous income from a sizeable investment portfolio, you’ll want to rise to the challenge of making living within your means a big priority.

And here’s the key point to remember: sticking to a budget doesn’t have to be boring. You can start looking into ways to save more by shopping in bulk, researching products and prices online, and checking out supermarket catalogues.

6. Consider downsizing

Downsizing your home is a major decision not to be taken lightly, but in some situations, shifting to a smaller house can save you a lot of money even after accounting for the property transaction costs.1 You may free up some cash immediately when you switch to a smaller, cheaper home, and you can then consider diverting the funds into investments to bolster your nest egg.

You may also then be saving on maintenance and running costs, and it can be an opportunity to find a house that’s more suitable for retirement living like a single-storey house. You can do the same with your car by selling an older, less fuel-efficient model and switching to a new, small hatchback that’s less expensive to run and service.

7. Take care when gifting your children

If you’re thinking about helping out the kids with cash gifts once you have access to super and reap a windfall from downsizing your house, Koch advises you think again.1 Your kids will have more years to build up their wealth, but you won’t have a regular pay cheque now you’re retired. It’s tempting and natural to want to help out the kids with mortgage repayments, a new car or a holiday overseas, but keep in mind your first responsibility is to yourself (and your partner), in ensuring you won’t run out of money.

A good percentage of Aussie retirees say their retirement standard of living is worse than they thought it’d be.3 Avoid becoming too optimistic about your retirement needs when you get access to super or a big lump sum from downsizing.

8. Keep educating yourself

Ideally you would have sought advice and gotten as much information as possible before you formulated your retirement plan. If you haven’t, it’s better to start now than never. Nearly one in four Aussie retirees say the information they sought to plan their retirement was insufficient.3 If you’re not educated about your finances now, you can’t take charge of where you’re going.

Super, tax, investments, and retirement finances can involve complex terminology and concepts, so it’s important to stay committed to learning what you need to know and getting advice when you need it.

9. Protect yourself against life’s risks

Financial shocks and unexpected things can happen at any stage in life, including during your retirement years. When you’ve retired, you might be more vulnerable because you’re no longer earning a steady income. Whether it’s an accident, illness, unexpected car repairs, or replacing the washing machine, the implications for your retirement nest egg – and whether you’ll have enough for the rest of your golden years – can be significant.

Make sure you have a buffer such an emergency cash fund.1 Insurance cover can also help you when life’s uncertainties hit hard. For example, ensuring you have a policy for Pet Insurance if you have a furry friend may assist when an unexpected personal injury or vet cost crop up.

10. Get professional advice

While it’;s crucial for retirees who want to take charge of their finances to know where their finances stand, it’s equally important to seek out advice from trusted partners where you need it.

Whether it’s a tax accountant who can help you with optimising tax, an investment adviser who guides you on putting your money to hard work or some other partner, your advisers give you expert insights that could be well worth the advisory fees you pay.4

A plan is crucial for your retirement finances, along with staying financially literate and checking in with everything from super to your investments. Protecting yourself against potential risks and getting expert advice can also be beneficial.

Australian Seniors Insurance Agency has more than 20 years of experience providing cost-effective, tailored insurance products to Aussie seniors. Find out more about how our products can support you during your retirement years or contact our friendly team today.


References

  1. Kochie’s Tips for Making Wealth Last Once Retirednews.com.au
    http://www.news.com.au/finance/david-and-libby-koch/kochies-tips-for-making-wealth-last-once-retired/news-story/7387bc0737bd0f4c40d36d71a8615518
  2. The Amazing Power of Compound InterestBusiness Insider
    https://www.businessinsider.com.au/amazing-power-of-compound-interest-2014-7?r=US&IR=T
  3. Aussies in the Dark Over SuperYour Life Choices
    https://www.yourlifechoices.com.au/finance/superannuation/aussies-in-the-dark-over-super
  4. Investing and Getting AdviceASIC’s MoneySmart
    https://www.moneysmart.gov.au/life-events-and-you/women/investing-and-getting-advice