Many older Australians moving towards retirement age are beginning to plan their retirements more thoroughly and are concerned about how they’ll replace earnings after work. Given the rise in the cost of living in relation to the Age Pension, many Australians will need to seek methods to ensure some form of passive income in retirement. Experts believe many Australians retiring in the next few decades could make an extra $1,000 in income each month if they planned and expanded on their income sources.
The Dependant Superannuation
Many Australians still believe Superannuation to be the most chronicled form of retirement savings. The ASFA states that average superannuation balances close to $360,000 for men retiring between the ages of 60 and 64 and $290,000 for women retiring between the same ages. If used effectively, those savings could be used to generate the necessary minimum income for an Australian retiree, positively complemented be a monthly inflow via interest, dividends or an annuity.
Investments in Real Estate
Property investment is still, for a significant proportion of retirees, the most effective and popular means of achieving passive income. Realistic monthly income streams can often exceed $1,000, depending on the area and quality of the property. Many retirees are beginning to value the practice of downsizing their principal homes as a means of freeing the capital and achieving ongoing income via a smaller investment property.
Shares obtainable for investment and payment of dividends
Investing in shares is for most people more appealing who are within the retirement age group value more having passive income from shares as dividends. Long-term Australian companies, particularly banks, resource companies, and telecommunications firms, issue out dividends regularly and consistently to their shareholders. Financial advisors to retirees advocate for the retention of a diversified portfolio, some retirees utilize the dividends to augment their pension.
Term Deposits and Bonds.
For some retirees, the safety of term deposits and government bonds is worth the opportunity cost. These investments offer lower returns than the stock and property markets, but entail investment much less risk than cash equities and real property. More risk averse retirees can arm their portfolios with shifts spread across fixed income more the certainty of a floor for unpredictable markets and turbulence.
Side Ventures and Online Earnings.
Passive income can also come from investment streams. Retirees exploring low-maintenance enterprises, for instance, of the Caravanners’ Association who hire out caravans and operate airconditioned donga units, earn a worthwhile income, while those with a bit of digital savvy can earn royalties from eBooks and other net material. While there is an investment of time and resources, over time these channels can yield a steady flow of income.
Balancing Passive Income with Pensions.
Centrelink rules dictate that retirees must somehow balance out the income streams with the pension aged over 66 claimable with a lower pension payment. The income test ensures that aged persons over 66 with a pension do not earn over a certain payment threshold. Financial planners recommend an more cautious approach when it comes to passive income strategies to ensure that retirees continue to enjoy the benefits of the pension while also earning an additional $1,000 or more to cover the increasing costs of living has gotten to be more expensive.