How would you perform at a financial fitness check up?
Fitness is a personal thing and so too are our expectations for financial wellbeing. Regardless of your situation, if you’re a retiree you need to ensure your retirement assets are performing at their peak and structured for your own personal circumstances.
Saving versus spending – Like that extra slice of chocolate cake, too much credit card spending can lead to serious weight-gain in the area of repayments. It’s easy to put it on but much harder to take off. But slimming your credit card debt can be done, and the exercise will make you strong. Saving, like resisting that second helping, also takes willpower.
Managing cashflow is perhaps one of the most important aspects of a retiree’s financial health. Create a budget like a weekly and monthly diet plan for everyday expenses, larger monthly bills and extras like holidays and house maintenance and, if you can, have a buffer for emergency expenses.
Entitlements – Similar to the way nutritional supplements help you stay fit and healthy when your diet’s not adequate, many retirees receive some form of benefit from Centrelink, usually the age pension and it’s important to make sure you’re getting everything you’re entitled to.
If you’re not receiving the full age pension it’s because of your assets or income levels. Make sure Centrelink values your assets, such as car and home contents, at current market value and not the purchase price or insured value. The differences may not be large but they all add up.
If your level of income is affecting your pension entitlements, you could also consider shifting funds into an income stream payable for more than five years, including a fixed-term annuity, which could reduce your Centrelink assessable income.
Retirees younger than 75, who are still doing a small amount of paid work, may also be eligible for a tax deduction for their super contributions. This could reduce their taxable income from investments, including any capital gain, which they may have realised from the sale of property or shares.
Investments – Just as a balanced training routine can deliver the best performance, a range of different kinds of investments can give you a level of financial security that will help you worry less about the future. And a mix of investments that can be flexible as your life and circumstances change is also a key for success.
Insurance – Have you ever noticed how many super-fit people don’t even look it? Their strength and endurance only becomes apparent when they are put under stress. When it comes to money, the fittest people financially often have an invisible asset working for them too – insurance. They know that even if they get sick or can’t work for a while, they’re covered.
Long-term planning – You will often use a personal trainer or coach to help achieve your fitness goals. Likewise with your financial planning think about using the services of a financial planner or accountant to review and structure your financial goals. It will often help you reach your objectives more effectively.
You’re likely a long-time retired so you need to invest for the long term. A balanced and diligent approach to your finances, like your health and fitness will reap the best rewards.
Related links:
The changing landscape for Australia’s retirees
A guide to planning for your future