I think all of us Boomers are only too aware of the dramatic changes our pension provision has undergone.
When things started looking iffy for the governments around the world responsibility for ones pension shifted from the employer to the employee, many of whom I’m sure, were totally unskilled at how to best save for a pension, as I was.
Move on a few years and just for good measure the fund providers “shifted the emphasis away from a focus on securing an inflation-hedged income through retirement to maximising your capital on the day your retire,” says Ian Anderson CIO at Grindrod when talking about retirement income vs retirement capital. He suggests that “An investment in a portfolio of growth-oriented, income producing equity and listed property securities not only offers investors the opportunity for long-term capital growth, but also offers investors a means to budget their retirement income both before and after they retire. ”
I have done just that on my investments spreadsheet. I know what I’m putting in each month and what it is invested in. I accrue all income from the investments and plough it back in and doing a little math can workout when the investments will be able to sustain our retirement needs. It is very reassuring to look at and quell any nervousness we might feel as we travel along our investment path.
It’s easy enough to work out your own future needs:
- Take a close look at what you are spending every month.
- Decide if there will be any changes to your spending once you retire (make sure it’s realistic)
- That is the amount your investments must produce for you on a monthly basis.
Now you need to look at all your investments and you will probably have them in various places so remember to collect them all together.
- Work out what the average annual return is on each investment and add them all together then divide by 12.
- Does it match your spending needs?
- If not then you must top up the investments!
If the income from your investments is already matching or more; then you can already retire because you will receive more income from your retirement savings than your annual salary. Yeah!
Investors need to secure, as best they can, an adequate level of inflation-hedged income both before and through their retirement.
Personally I’m putting my investment eggs into real estate. I have seen it bounce back fairly well from the most recent financial collapse and by working with a crowd-investing company that scours the world for the best investments I feel I should be alright on that score.
Robert Laura also suggests that we should think of starting a retirement business which takes a page out of the handbook of the rich and powerful. Lets face it the rich all have properties so property seems fairly safe but I have taken on board the need for more income streams so I’m starting a small online business too. The more strings to my bow the happier I am.
Do you have enough retirement capital to provide you with an adequate retirement income?
I do hope so. If not it’s never too late to remedy that!
Go well till the next time
- Robert Laura – How To Start A Business For Retirement Income