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How to fund your new life after retirement: opinion

Seventy-six per cent of Australian seniors over 60 would prefer to age in the comfort of their home. Eighty-three per cent also believe home ownership is essential to maintaining independence and financial freedom during the later stages of life.1 Planning a future of financial stability allows seniors to reduce stress as they enjoy the freedom of living as they please while still enjoying life’s luxuries.

At Home Instead Senior Care, we are a national provider of high quality in-home care for older Australians and have created a guide on how to plan for successful ageing.

The guide includes tools to plan for wellbeing and financial security in collaboration with Perpetual Australia. This guide has been curated to assist in demystifying the aged care maze, providing seniors with a plan on how to age successfully.

Here are our top five tips for funding your new life:

  1. Account-based pensions

Once eligible, you can transfer all or part of your super to an account-based pension and receive regular income payments. As this is within the superannuation system, income and payments are generally tax free. However, it’s important to understand that your income is not guaranteed – if your investments don’t perform, you may receive less than you planned for.

2. Annuities

You can buy an annuity which then gives you a set income for a defined period, or for the rest of your life, depending on the product you choose. You receive a guaranteed payment regardless of market performance or interest rate changes. On the downside, you don’t have the flexibility to withdraw more if you need extra cash.

3. Pension and other government assistance

If you haven’t already done so, you should check whether you are eligible for a full or part pension from the Australian government – this is looked after by Services Australia (Centrelink) and the Department of Veterans’ Affairs (DVA). There are also other concessions available which you may be eligible for. For example, most people over 60 who aren’t working full time will be eligible for the Seniors Card, which offers travel concessions as well as discounts for a range of other goods and services.

4. Discretionary income

Money for fun and to cover the unexpected. When you have looked after life’s essential expenses with a retirement (or semi-retirement) income stream, what about extra money to treat yourself to the finer things in life? The secret to discretionary income is quick access to cash. The financial term for this is liquidity – cash is the most liquid asset, while investments like real estate are considered illiquid, as it is very hard to sell just one room of a house.

5. Term deposit

With a term deposit, your money is invested for a fixed period and you receive an agreed rate of interest for the term of your investment. It’s a popular way to earn money for life’s pleasures – and emergencies – because the cash you receive is easy to access, it’s liquid. Another benefit is the safety of a term deposit because your original investment is returned at the end of the term.

Martin Warner is CEO of Home Instead Senior Care

1 https://www.canstar.com.au/account-based-pensions/older-australians-want-to-age-at-home/

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