Can You Afford to Retire in 2024 - Retirement Strategies Beyond the Usual

Written on the 11 March 2024 by Parkside InvestorPlus

Imagine this: you're nearing retirement, picturing golden years filled with travel and relaxation.

But a glance at your nest egg paints a different picture – not quite enough to live comfortably.

This scenario is all too familiar for many Australians.

A recent study by the Association of Superannuation Funds of Australia (ASFA) revealed that the average retirement balance for Australians sits at around $200,000, falling short of the estimated $640,000 needed for a comfortable retirement [Source: ASFA Retirement Standard December 2023].

So, what can you do if your savings don't quite reach that golden standard?

While the usual advice of starting early and saving more is crucial, it might not be readily available to everyone, especially those approaching retirement.

Here are some often overlooked strategies to help you stretch your retirement savings:

1.      Consider a phased retirement: Instead of a complete break from work, explore a gradual transition.  This could involve cutting back on hours, taking on a part-time role, or consulting work that utilises your skills and experience. This not only provides additional income but also keeps you engaged and connected.

2.      Explore downsizing: Moving to a smaller, more affordable home can free up significant capital. Consider areas with lower living costs or explore alternative housing options like retirement villages or co-living arrangements. According to the Property Investment Research Centre, downsizing can potentially free up hundreds of thousands of dollars, depending on your location and property type [Source: Property Investment Research Centre - Downsizing in Australia 2023].

3.      Leverage government benefits: Many Australians are eligible for government benefits like the Age Pension, which provides financial assistance to low-income retirees. Additionally, explore benefits like the Commonwealth Seniors Health Card, which offers discounts on healthcare and medications.

4.      Invest in income-producing assets: While traditional investments might be a concern, consider options like dividend-paying stocks or real estate investment trusts (REITs) that generate regular income. However, remember that these come with inherent risks, so consult a financial advisor to ensure they align with your risk tolerance and financial goals.

5.      Rethink your retirement lifestyle: A comfortable retirement doesn't always have to involve expensive travel or extravagant hobbies. Focus on activities that bring you joy and fulfillment without breaking the bank. Consider exploring local attractions, volunteering, or pursuing creative pursuits.

Remember, retirement planning is a journey, not a destination.

And as mentioned above, the earlier you start, the better the outcomes, however, not everyone who may be approaching retirement had done so.

Today, there are other technical strategies for maximising your retirement nest egg such as;

• Review your withdrawal rate
• Consider a flexible withdrawal rate
• Consider annuities

Again, this may not make sense to all of us, and this is where consulting a certified financial planner will most definitely help in choosing the best option to maximise your superannuation balance.

By embracing these strategies and adopting a flexible mindset, you can navigate your golden years with confidence and make the most of your retirement savings.

If you’re approaching retirement and don’t feel secure and comfortable about this next phase of your life, then let’s have a chat.  Parkside InvestorPlus at (02) 9899 4899