How incredible would that be?
But are you secretly worried you’ll run out of money when you finally give up work? That you won’t have enough to see you through your retirement?
It’s certainly something that weighs heavily on the minds of many.
Well, take a deep breath because the latest research has shown that you may be able to spend way more than you realise, giving wealthier retirees the capacity to spend up to 53% more than anticipated.
To get the most out of your nest egg, you’re going to have to play your cards right – but it’s entirely doable. So, let’s explore the top 5 tips that will help you dispel your future financial fears.
1. Don’t inflate the situation
There is a tendency amongst retirees to overestimate how much money they need to put aside to account for the increased cost of living. For example, if inflation is rising at 3% annually, then many people are panicked into thinking they need to have 3% more income to spend every year.
But findings show that numerous investors actually spend a bit less as they go through retirement. So, you can splurge on more initially to enjoy the things you want, while you can.
2. Beware of the bear
The fear of a market downturn creates a scarcity mindset, seeing many retirees scrimping and saving every penny – just in case. But a more sensible approach would be to spend while you can, then rein it in when you need to be more discretionary. Why waste a perfect opportunity to travel or buy a new car for the sake of ‘what ifs’?
3. Do the maths
As you enter retirement, you may find that your previous outlays decrease or disappear altogether, such as paying for a mortgage or commuting. So, you’d actually have more at your disposal than you first thought.
But there’s an urge to overcompensate for future needs based on your current ones, leaving you with less spending money than necessary. It’s time to draw up a new budget plan to help with the numbers.
4. Keep a splurge fund
Essentially, this means saving for a rainy day. If you’ve had a good year and your investments have performed well, then you’ll have a bit more spending money up your sleeve. But you may not wish to spend it straight away. So, pop it aside in a separate account for when you do want to take that trip around the world.
5. Axe the tax
Get yourself a personalised tax plan to determine how you can minimise the tax on your super withdrawals, and, therefore, maximise your spending capacity. There are several financial tools available to help take the guesswork out of this process by predicting an optimal spending strategy to support the lifestyle you’ve earned.
While everyone has different needs and varying income levels, there is always a way to capitalise on what you have. The rest is up to you.
If you’re looking for alternative strategies to build your nest egg, give GSA a call today. We have a unique investment opportunity that’s perfect for retirement.