Financial planning after you retire
Setting yourself up for retirement and achieving your savings goal is the first part of retirement planning. But it doesn’t stop there. Once you (formally) retire, you enter a new phase of financial planning, one where you’ll need a new money management game plan.
You need to keep a close eye on the relationship between your money and your lifestyle. Here’s what to consider helping you maintain the comfortable retirement you worked so hard for.
Assess your financial needs (and wants)
Your financial picture changes when you retire: from income stream(s) changes to adjusting expenses and changing insurance and medical needs. As with pre-retirement planning, you need to create a plan for your money that serves your wants, needs, what you can afford, as well as the goals you want to achieve.
Keep taxes and penalties in mind
Contributions to retirement savings (such as retirement annuities, provident and pension funds) are tax-efficient ways of saving, but once you withdraw or generate an income from your investment, you’ll be subject to tax. Therefore, it’s important to consider the impact that tax and accessing your cash early can make when deciding how to manage your money.
Create a budget
Budgeting helps you manage your money effectively and being realistic about resources and expenditures will help you prepare for life’s eventualities, but also, its opportunities. And since you’re likely to be retired for a long time, you need to be mindful about how you allocate your resources.
It’s helpful to make a retirement budget before you retire so that you can adjust your spending or take financial action where it’s needed. Here’s how to draw up a budget.
Keep on saving
Saving continues to be a keystone of your financial wellness, even if you’re retired. Having money set aside for emergencies, as well as continuing to invest wisely, is vital. More than ever, during retirement, you want to avoid high-interest debt.
It’s important to have your savings work with your lifestyle, so consider if you need to have access to your cash, which accounts give you a great return and what your timeline for setting that money aside is.
Moving from a retirement annuity to a living/life annuity
If you’ve been contributing to a retirement annuity, you can access a portion of your retirement benefit and the rest must be used to buy a new product, called a life or living annuity, which are investment solutions that either provide you with a set monthly income or an income that can be drawn from flexibly. Need help with retirement money management? A financial advisor can guide you through the process of allocating and investing your retirement funds efficiently so that you can enjoy the most comfortable lifestyle. Speak to one of our financial planners today.
Terms and conditions apply. This information does not constitute financial, investment, tax, legal or other advice. Before making any decision or taking any action regarding your finances, speak to a qualified financial advisor.
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