Navigating through life can be tough or easier depending on perspectives, foresight, planning, and, most of all, understanding the true essence of life, which many of us lose sight of in the everyday struggle for survival and keeping up with the world around us.
Retirement years have always been about taking a much-needed break from the hard work and responsibilities and taking the time to rejuvenate body, mind, and soul to lead a peaceful and stress-free life. But with the difficult times we are living through globally, both in terms of health and finances, it requires more meticulous planning for the retirement years, especially if you are considering investing in retirement homes and spending the rest of your life there.
Progress in medical science has increased human life expectancy, and the up gradation in living standards, which requires the finances to sustain and upkeep our lifestyles for a longer period than before, calls for a fresh look at how to save, plan, and invest in retirement villages for a peaceful and secure life post-retirement.
Building wealth for your golden years: investment strategies
- Retirement Goals: The best time to begin planning for your retirement years is at least ten years before your retirement age to begin your retirement fund at the earliest. The first step in planning for your retirement is to sit down and list your retirement goals. How would you like to live your golden years? Living conditions, financial freedom, pursuing unfulfilled dreams and desires, learning new skills, etc. Now try to calculate the approximate finances required, considering the inflation rate and interest rate on investments like bonds, equity, etc., to live the kind of retirement life you envision for yourself and your partner.
- A comparative analysis: A comparative study vis-à-vis living in your house vs. living in a retirement village is important to understand the financial and practical aspects, which will help you decide and begin planning accordingly. Factor in the following aspects in your calculations:
- Housing and maintenance costs, including utility bills.
- Healthcare and medical expenses
- Basic day-to-day expenses on food, clothes, recreational activities, and transportation
- Travel expenses include flights, gas or petrol costs, hotels, etc.
- Life and medical insurance
- Cost of inflation
- Profitable investments: Once you have a clear picture of the finances you will need for your retirement life, begin investing for profit and growth. It is best to consult an investment banker who can guide you regarding market trends and advise you on investing in sound investment vehicles and creating a portfolio of balanced growth income beyond inflation and in real terms by investing in income-generating investments like blue-chip dividend stocks, mutual funds, and equity in real estate, including investing in retirement homes, art, and so on. Diversity in your investment portfolio will save you from losses if any investment vehicle falls in value.
- Minimise your taxes: Avoiding paying taxes is not a possibility, but you can minimise the cost of taxes with the help of these strategies:
- Optimising withdrawals of income
- Use of capital gains and capital losses exemptions
- Check the taxation policies in your country or province in consultation with your CA to know how to make the policies work for you.
- Make an estate plan: Drawing up a will is not sufficient, nor will it safeguard your wealth when you sell your home to move into one of the best retirement villages in Sydney. The biggest wealth loss occurs during estate sales and transfers if you have willed your estate to your children due to the high taxes on the sale or transfer of property. To avoid this, it is important to have an estate plan drawn up to have adequate measures in place for deferring or reducing the taxes on your estate.
- Invest in insurance policies: Life and health insurance policies are a safety net that will help restore the precious wealth lost in the event of an illness or death. For instance, if you depend on your partner’s pension, you will stop receiving it when your partner passes away, so income from their life insurance can safeguard you in such a scenario.
A strategic plan for your golden years is essential for a secure and tension-free life in retirement villages. Consult an advisor for the best way to begin saving, planning, and making a sound and profitable retirement village investment that will last your lifetime.