Retirement is usually provided for through savings, investments and superannuation (the pension). However, many people find that when they reach retirement, their finances are not sufficient to live comfortably. Here we look at financial independence and living without an active income.
Continuing to work
As superannuation is not capped, you are free to work and earn as much as you want without penalty. If you are not working full time, you could consider the possibility of short-term or part-time employment. A lifetime of work experience is invaluable, and employers often look to seniors to fill roles such as mentoring, consulting or coaching, as well as working in more specialised areas.
While employment is useful for keeping active and bringing in income, it may not always be an option. In this case it is important (ideally before retirement) to look at how to generate a passive income. The most common is rental income from property. If you do not already have rental property, your options could include downsizing your house to free up equity to fund a second, or liquidating personal assets to provide a deposit for another house. Even with a minimum deposit, the income generated from a rented property will usually exceed the amount of a median mortgage repayment, thus providing an external income to supplement superannuation.
These are becoming increasingly popular, especially for those who have a house, but perhaps not enough for a deposit to buy a second one. By converting the equity in the house into a lump-sum payment, you can retain your house, as well as free up capital to invest or fund a deposit to create a new income stream.
If your superannuation is not enough to live on
You can apply for financial assistance from WINZ. This can be means tested or assets tested. If you meet the requirements, you may be able to get help with housing costs, health costs, emergencies, and caring for children or someone who is disabled or ill.
If dealing with money matters is difficult
There are two free services in your community you can use to get help with money problems. These services explain financial jargon in layperson’s terms.
- You can get individual help with your household and personal finances through Building Financial Capability Services.
- You can take part in a group and learn from others who are in a situation like yours through the MoneyMates programme (a peer-led support group that encourages people to learn from others as they talk about money and finances in a group situation.)
Be prudent with your finances
With anything money related, it is important to check all aspects very carefully before entering into any financial arrangement. But looking at all your options and being financially prudent can make a big difference to your retirement.