A Robust Retirement for Life
With longer lifespans and volatile financial markets, making sure a retirement plan goes the distance is more important than ever.
Although some living and social costs may become less expensive, retirees face increased costs in other areas, like medical expenses, or home care and assistance. Living a long life requires a solid nest egg from which can flow a steady income stream, and the ability to withstand any number of financial or market shocks.
Your Retirement Income
Although Australians have compulsory superannuation or the age pension, it is only one part of a retirement income plan. In reality, most people will be supported by a mix of sources such as shares, real estate, inheritance, account-based pensions, lifetime annuities or other investments.
Retirement Investment Risks
Longevity Risk
Without the certainty of knowing how many years to plan for, it’s much safer to plan well into 90yrs and up. Longer life spans run the risk of income not being able to last throughout retirement.
Inflation
The impact of inflation is often overlooked but is absolutely necessary when it comes to retirement planning. As a retiree, the total value of assets slowly goes down, but the costs of goods and services still go up. Without the right strategies in place, even small living cost increases can have a significant impact over time.
Market Risk
Market volatility without the years left to bounce back is a true risk. Two-fold would be investments falling in value while still needing to withdraw for expenses.
What Would a Robust Retirement Plan Cover?
Coverage for Basic Living Costs
Ensuring enough income and security for day-to-day living expenses until the end of life. Along with the ability to stretch this further for longer, due to increased life spans, should be the core foundation of a retirement plan.
Accessibility
Basic living costs aside, many retirees want to live their post-work lives to the fullest. Flexibility is needed for lump sum withdrawals to cover the non-essentials, such as restaurants, holidays or even unexpected medical bills.
Diversity of income streams
Peace of mind for continual regular payments, regardless of what happens in the share market or if an investment stream dries up.
IN CONCLUSION
To be able to spend confidently in retirement means, more time enjoying retirement, and less time worrying about it.
A smart financial portfolio can help manage risk and ensure it is working at every stage of retirement. For discussions on your long term investment goals please don’t hesitate to reach out to Shape Financial.