Navigating the challenges of self-funded retirement: a guide for pre-retirees

The journey toward retirement can be fraught with challenges, especially for self-funded retirees aged 50-70.

Many individuals in this age group are often busy planning for a secure future, but critical financial considerations require careful planning and strategic thinking. Let’s look into some of these challenges and how we can help you navigate them effectively.

Investment strategy in retirement: understanding the impact of inflation on retirement income

One of the most significant challenges facing self-funded retirees is the impact of inflation.

Unlike Centrelink benefits or defined benefit pensions, which are indexed to inflation, many retirees rely on the income and draw downs on their own capital which is finite. This means that as the cost of living rises, your purchasing power may decline if your investment income doesn’t keep pace.

Our advice:

To combat this, it’s crucial to have an investment strategy that not only preserves your capital but also generates income that can grow with inflation. At Precision Wealth Management, we can help you assess your current investment allocation and adjust it to ensure you have a balanced portfolio. This might include a mix of growth assets that can offer higher returns over time while maintaining a portion of defensive assets for stability.

The challenge of market volatility when above the age pension threshold

Another significant concern for those comfortably above the age pension threshold is the lack of a safety net during market downturns.

Individuals who qualify for even a partial age pension benefit from an increase in government support when their investments lose value, allowing them to draw less from their assets until the market recovers.

Conversely, self-funded retirees must navigate these downturns without such a cushion, which can lead to forced asset sales at reduced prices to meet living expenses.

Our strategy:

We recommend establishing a diversified investment portfolio that includes defensive assets to mitigate this risk. This approach provides a buffer during volatile market periods and helps ensure you can draw from these assets rather than being compelled to sell investments at inopportune times. Our team can work with you to create a tailored investment strategy that aligns with your risk tolerance and financial goals.

Enjoying early retirement without compromising future security

Many pre-retirees face the dilemma of wanting to enjoy their retirement in the early years when they are still physically able, but also wanting the security of having funds later in life. How do you find the balance?

Our guidance:

We advocate for a structured withdrawal strategy so you can enjoy life early in retirement while ensuring long-term financial security. This includes setting a sustainable spending plan that considers your current lifestyle, desires and future needs. At Precision Wealth Management, we can help you model various scenarios to ensure you can spend comfortably now while securing your future.

Navigating the challenges of self-funded retirement: a guide for pre-retirees

As you approach retirement, the financial landscape can appear like a minefield of obstacles and challenges. However, you don’t have to navigate it alone.

Precision Wealth Management is dedicated to helping you achieve your financial goals through informed decision-making and personalised retirement planning advice. Our experienced advisors will work with you to develop a comprehensive retirement plan that addresses these challenges and positions you for a fulfilling retirement.

Contact us today to discuss how we can help you create a robust strategy for a secure and enjoyable retirement.

DISCLAIMER – The information provided in this blog is general and does not consider your individual financial needs or objectives. It does not constitute personal advice. We recommend seeking out professional and independent financial, legal and tax advice which has been designed for your individual situation before acting on any information contained below.