How to protect your retirement?
A recent ABC article explains what low interest rates really mean for retirees and savers.
(You can read the full ABC article here)
From the article:
“How to protect your retirement?
Which raises the question, if interest rates are going to stay low for a lot longer than we’d thought, how do you protect your retirement?
Leading independent financial planner, Claire Mackay, from Quantum Financial, says it’s inevitable that people will move further out along the risk curve to chase the retirement income they want.
In other words, shares and property. That ‘search for yield’ we’ve heard so much about in recent years.
“I always try to be conservative, and on that basis you can still get around 6 per cent a year on shares without taking too much risk. That’s more than double cash and bonds,” said Claire Mackay.
In reality with shares, it’s still possible to get more than 6 per cent, but Claire Mackay points out that retirement is about paying the bills not beating the market.
Claire Mackay believes that if interest rates are going to stay low, everyone 45 and over should be focusing on their retirement.
“You need to be giving yourself as much time as possible to prepare and controlling the things you can control,” she said.
“You can’t control interest rates, but you decide what you spend; you decide how much you contribute to super; and when you are retired, you decide how much you withdraw.”
For people under 45, Claire Mackay recommends paying off your house as fast as you can to free up money to save towards retirement.
This will also allow you to capture the full amount of any capital gain on your house as quickly as possible, which can be used to provide more for retirement when you stop working.”
(You can read the remainder of the ABC article here)
Claire Mackay LLB LLM BCom CA CFP CTA
I am a financial planner, SMSF expert and company director. I thrive on providing independent, expert financial advice to my wonderful clients. I was recognised as Financial Planner of the Year 2015 and Investment Adviser of the Year 2014.