Money for Retirement: Four Things Seniors Can Do

27 June 2017

In a 2016 report published by HSBC, 71% of Australians who are wishing to retire in the next five years may not able to do so because of insufficient savings. The report entitled “The Future of Retirement” also noted that more than one-third of working age people are afraid of their future financial situation, and the turbulence in the stock market had added to the pressure.

How Much Do You Need to Live a Comfortable Retirement in Australia?

According to the Retirement Standard published by the Association of Superannuation Funds of Australia (ASFA), a senior couple requires $ 59,619 per year or $ 1,143 per week to live a comfortable life.

ASFA defines comfortable retirement as the capacity to be involved in a “broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic, and occasionally international holiday travel.”

So what can you do if you are about to retire in the next five to 10 years, and your savings are not enough to provide you a comfortable life? Below are four ways you can do to improve your nest egg:

Four Things You Can Do to Boost Your Retirement Savings

1. Increase Your Monthly Savings

Of course, this is an obvious step, and which may take a toll on your current lifestyle. But it could be an effective way to make sure that you will have enough money when you actually do retire. If you stick to a savings plan, you will be more likely to accumulate extra cash after 5 to 10 years. For instance, if you have zero dollars in your retirement account at age 55, and you are able to save at least $500 every month, you may then have approximately $89,000 by age 65 (assuming a 5% annual interest rate). If you can increase your monthly savings to $1,000, you may stash away about $180,000.

Will a late savings boost sufficient to provide you a comfortable life for your whole retirement? Perhaps not. However, it’s still better than entering retirement with minimal cash and only Centrelink to rely on.

2. Extend Your Career

Working for a few more years can help you save further funds to prepare for retirement. Extending your working years for two to three years will help you to save more, and the money you save may then have more time to grow by way of interest, dividends or share price appreciation. If the same 55-year-old saved at least $ 1,000 per month and retired at age 68 instead of 65, he or she could retire with almost an extra $ 70,000, or retirement savings of $246,000 instead of what may have been $180,000.

The Australian government is also encouraging workers to stay longer in their jobs by offering the Work Bonus, which is an incentive for those who could qualify for the Age Pension to continue working. In this program, the first $250 income from fortnightly employment will not be assessed under the pension income test, up to a maximum of $6,500.

However, even if you’d like to extend your working years there’s no guarantee that you will be able to. Many workers are forced to retire early because of company downsizing, the need to take care of a spouse, or health issues. Seniors who are looking for fulltime or part-time jobs can visit helpful sites such as Your Life ChoicesWorkforce 50, and Be Next.

3. Review Your Investment Portfolio

Some retirees who have small savings may be enticed to invest in stocks, in the hope that an aggressive strategy can significantly increase the size of their nest egg. Such a strategy is very high risk, particularly over a relatively short term, and it is recommended those considering this seek financial advice immediately. A qualified financial adviser can help you to invest in a mix of bonds and stocks that may provide you with a potentially higher return according to your risk level. However, be sure to shop around and choose an experienced, qualified adviser who will tell you what you need to hear – not just what you want to hear.

4. Consider a Reverse Mortgage

It’s fair to say that all seniors want a good retirement, with enough funds available to live a comfortable life. Regrettably, the reality is this is not always possible and many retirees are seeking alternative ways to increase retirement funds or to supplement the Age Pension.

One option is to tap into your home equity by taking out a reverse mortgage. Here at Heartland we offer a reverse mortgage loan for seniors, which allows you to access a portion of your home equity. You can receive the loan proceeds as a lump sum or an income plan to supplement your pension. Heartland can also provide a Cash Reserve Facility, that can be used for future needs or unforeseen expenses.

Meanwhile, you don’t have to worry about regular repayments, as the loan is repaid when you choose to sell the home or you pass away. And the best feature: you can stay in your home for as long as you choose. A Heartland Reverse Mortgage allows you to retain ownership of your home, so you can truly live in comfort during your retirement.

Heartland has a comprehensive guide that you can download for FREE here, or you can call our Reverse Mortgage experts at 1300 889 338 for a chat.

Regards, Andrew


* This information has been prepared without taking account of the needs, objectives, or financial situation of any particular individual. Applicants should consider their own circumstances and, if necessary, seek professional advice.


Information provided is accurate as at 27 June 2017 and may change from time to time