E17: Retirees, spend your capital while you are alive

How do you make the post retirement income equation work best so you have a good lifestyle and make the most of the capital you have?

Paul Versteege, Policy Officer from the Combined Pensioners and Superannuants Association throws a challenge – do you want to be financially secure now, or when you’re dead?

Many of us don’t give our retirement incomes enough thought, especially the notion of carefully running down our capital while we are alive, and enjoying a comfortable lifestyle in preference to scrimping and leaving money behind.

Paul Versteege also considers what we might do should we be fortunate enough to receive a small inheritance, say around $50,000. With interest rates so low, money in the bank won’t grow. Other options are managed funds, or shares if you understand the share market. Financial Planners can be expensive, costing around two or three thousand dollars. You can also keep the money as an emergency fund. But definitely don’t put it under the mattress!

He advises us not to treat our lifesavings as sacrosanct and to use the capital we might have in retirement to fund a comfortable lifestyle. It’s important to estimate your lifespan and work out how much income you will need. After retirement, you can buy a deferred annuity, a form of pension you can purchase. This gives you certainty that you will receive a payment each fortnight. If you want to leave an inheritance, and own your own home, for many people that is sufficient.

CPSA has put out a booklet on how to use your capital in your lifetime to make sure you don’t want for anything in retirement.

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