As people near retirement age, one of their primary concerns is how they will support themselves financially during their post-working years.
While some may have built up substantial savings, others may not have been able to do so. Fortunately, there are several income streams available to retirees that can help them maintain their desired standard of living.
These income streams can take many forms, including government benefits, personal savings, and employer-provided retirement plans, among others.
So what are the top income streams for retirement?
While there are numerous income streams that can benefit retirees to support their post-work lifestyle, Starts at 60 took a deep dive with Stockspot’s head of client care and advice Sarah King into the “three major income streams for retirees” which include superannuation, the age pension, and personal savings and investments.
Properly managing retirement income streams, such as the three above, is essential to ensure a comfortable retirement, as well as to protect against financial risks such as inflation, longevity, healthcare costs, and other unexpected expenses.
By understanding your income sources, you can plan for retirement, maximize your income, manage financial risks, and make informed decisions about your financial future.
Adequate planning for retirement is of the utmost importance to ensure that the income sources you plan to rely on during retirement will adequately cover your expected living expenses each year.
With longevity risk becoming a common concern for many retirees, there is a growing concern about outliving one’s pensions, savings, or other investments.
Seeking advice before retiring can be extremely advantageous, as it can provide a sense of assurance that you will have sufficient funds to support your retirement and allow you to devise strategies that optimise the benefits of each income stream for the entirety of your retirement.
In addition to being familiar with your retirement income streams, King advises considering “your day-to-day living costs as well as annual holidays, or other potential expenses like a new car, aged care expenses or other health-related costs”
It’s also important to be aware that “changes in your assets and income may also lead to changes in your age pension entitlements.”
When it comes to investments outside of your superannuation, King suggests that retirees may want to ensure that they are still working in their favour.
“Are you getting the best savings rates, are you taking too much risk, are you diversified enough to ensure your funds will continue to grow but also be protected along the way,” King said.
While such retirement income streams can go a long way to ensuring a comfortable retirement, there are a number of additional measures retirees can adopt to live the retirement of their dreams.
Other measures King suggests include:
Understanding the various retirement income streams that are available is essential for ensuring financial security in retirement. By having a comprehensive understanding of your income sources and potential risks, you can make informed decisions about your retirement goals, maximize your income, and manage your financial risks effectively.
Seeking professional advice can also be highly beneficial, especially if you’re uncertain about your retirement income or need guidance on how to optimise your income streams for the duration of your retirement. With careful planning and management of retirement income streams, retirees can enjoy a comfortable and financially secure retirement for years to come.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.