Whether you’re already retired or planning to retire, your 70’s is the decade of your life where you should be focusing on living a comfortable retirement and leaving a lasting legacy.
Managing your investment portfolio and estate planning are vitally important in your 70’s. And for the years ahead of you, planning for your health and ensuring that your money lasts as long as you are things you should also check off your bucket list.
1. Create multiple streams of income for retirement
If you plan to fully retire in your 70’s and beyond, it’s essential that you create multiple streams of income to help pay for your living expenses, like groceries, bills and health care, as well as emergencies. Ideally you’ll have your super to fund your retirement, but you can also get the age pension from Centrelink if you’re eligible, and you can put your money in a savings account or term deposit to earn interest income. Additionally, you can invest in property to earn rental income or in the stock market to earn dividends.
2. Consider your super withdrawal options or your minimum annual pension payment
You can get your super as an income stream, a lump sum, or both. The super income stream (sometimes called a pension or annuity) is a series of regular payments from your super fund that’s paid at minimum on a yearly basis. The super lump sum is when you can withdraw all of your super in a single payment, but you can also withdraw your super in several lump sums. However, it’s important to note that the withdrawal option you choose could affect the amount of tax you have to pay.
If you have a superannuation account-based pension, you need to withdraw a minimum amount every financial year to be exempt from paying tax. The minimum amount will depend on your age and the account balance of your pension, which is calculated on 1 July each year. For example, if you’re aged 75-79, the minimum pension payment is 6% of your account balance as at 1 July 2017.
3. Reconcile your budget with your income
It’s important to make sure that the amount of money you earn from your sources of income will last for the whole of your retirement, which could be as many as 30 or more years. You can do this by checking how much you currently spend on your expenses and how much you expect to pay in the future (including health care). Also budget for unexpected expenses such as a serious illness or accident. Most importantly, don’t spend more than you earn if you want to make your money last.
4. Pay off your debt completely
If you still have debt, such as a mortgage, credit card debt or other loan, now is the time to pay off the remaining balance in full. By the time you’re in your 70’s and ready to retire, you should have enough money saved up to get out of debt completely. Being debt free will allow you to focus on the things that are most important to you, like your family, health and retirement.
To speak with an expert about your debt, contact the professionals at Credit Counsellors Australia.
5. Plan for your health
Plan and discuss with your family about your desire and need for possible long-term health care. What’s more, you’ll need a health care proxy (also called a health care/medical power of attorney) to help your loved ones manage your care if you become incapacitated. A health care proxy is a legal document in which you can appoint a health care agent to make medical and health care decisions for you if you’re unable to.
6. Review your insurance policies
This includes home and contents insurance, car insurance, health insurance, long-term care insurance, disability insurance, income protection insurance and life insurance. Reviewing your insurance policies will ensure that you and your family are fully covered in the event of an emergency situation or disaster. It’s also important to review your insurance policies to make sure that the level of coverage is suitable for your current situation and that you don’t pay more than you have to.
7. Consider ownership transfer and management succession for your business
If you have a business, you’ll need to think about who you want to transfer ownership of your business to and who you want to succeed as the manager of your business. This is especially important in case you pass away.
8. Manage your investments
If you’re already investing in property or in the stock market, you could consider taking a conservative approach to investing where there’s less risk of losing your capital. But with many years ahead of you, you might still want high returns on your investment to live a comfortable lifestyle in retirement. Speak to an investment professional to determine what’s right for you and your personal situation.
9. Help pay for your grandchildren’s education
Education is expensive in Australia, especially higher education. So if you have grandchildren, you can contribute to their education savings account and give them the opportunity to attend college or university. Paying for your grandchildren’s education is a great gift, as they won’t have to look for money themselves or get a student loan.
10. Review your will, estate plan and enduring power of attorney
Finally, review your will and estate plan on a regular basis. You want to make sure that your assets (money, house, car, clothes, etc.) go to the right people when you pass away. If you get remarried, get a divorce or a family member dies, it’s important to update your will and estate plan to reflect your current circumstances. By naming your beneficiaries, they can get your assets straight away without dealing with the court or a third party, and you can also avoid family disputes over your assets.
Don’t forget to also review your enduring power of attorney to ensure that you still want the same person you originally appointed to make financial and personal decisions on your behalf when you’re unable to make your own decisions. If not, appoint another person to handle your affairs when you become incapacitated.
Keeping your goals on track
If you have debt that’s getting in the way of you reaching your goals, the team at Credit Counsellors Australia can help you. Contact us today and we can discuss the best methods for managing your finances so you can keep your goals on track and enjoy a long, comfortable retirement.