by David Greenslade
The current world economic crisis has caused a massive destruction of wealth, and there is barely an investor who is immune. There are tentative signs of economic recovery, but using history as a guide the recovery is likely to take time, it will be patchy and there may be further volatility to come in some asset classes.
For many of us, our asset base will not recover immediately to pre-crisis levels. Some assets may rebound and grow nicely. Other assets may never fully recover. It is time for us to face the reality of what has happened and look to how we are going to adapt in order to ensure a financially secure retirement.
Some options to consider are:
- Could you accept a lower standard of living in retirement?
- If you are not already retired, could you continue to work to an older age, giving yourself extra time to rebuild wealth and less time to consume it once retired?
- If you are retired, are you willing to get a part-time job? You will be surprised just how employable retirees are in comparison to school leavers.
- Are you willing to take a higher risk with your remaining investments in order to theoretically get a higher total portfolio return? This option should only be contemplated once you have fully discussed the risks with your financial planner.
- Are you prepared to spend your capital in retirement? There is no point taking the money to your grave. Enjoy it in retirement, especially while you are fit and active.
- Would you prefer to take a low-risk approach with a well diversified portfolio? The day-to-day income flow from investments may be less than you are used to, but this is compensated for by the regular cashing up of the asset base.
- Are you open to eventually selling your home and using the proceeds to generate additional retirement income to spend on your family, pay for rent, purchase a lower- value smaller house or build something at one of your children’s homes to live in?
- Are you willing to use other vehicles to grant access to the equity in your home to fund retirement? This can be achieved via reverse annuity mortgage facilities from a small number of specialist lending institutions or via innovative financial arrangements within your family. We can talk through how this works and discuss whether these are viable options for you.
You may cringe at some of the options, but in the new reality we now face, a review of your retirement planning may be the biggest favour you will ever do for your future self.
Contact us for a detailed document on this retirement rethink. Once you have read it, we can get together to discuss which option or combination of options best suits you.
