January 13th, 2010 by Damian Papworth

Personal finance strategies can often be affected by the upticks and downturns of the global financial market, but this association can be unwise to maintain. While ‘bull market’ times suggest investors should continue to buy, it is often time to sell certain assets; the reverse is true in a bear market, though selling is all too common when prices slip.

The best strategy when it comes to saving for retirement is to somehow shrug off any economic indicators you consider pertinent. After all, at the end of your career, it’s what you’ll be left with. How can you keep one hand contributing to the fund while the other fends off any present trouble in your finances? Here are five tips for making your retirement the joy it should be.

1. Always keep the scale in mind, no matter how drastic the elements of the scale get. When times really do get tough, it’s tough to imagine maintaining the same diligence in terms of savings. However, you cannot abandon the mission you have undertaken. Scaling back everywhere is something you will have to do in order to keep your savings plan going. Even if it seems as if you’ve cut out all luxuries, you can bask in the happiness of how comfortable your future will be.

2. Ignore a little debt, at least temporarily. As the economic crunch hits and people begin to get wary of debt, the money traditionally reserved for retirement savings may end up going toward debt payback. Instead of pulling these funds away from a retirement fund, keep them coming and let the debt slide short-term. The amount your money will grow long-term will outweigh the punishment you receive for the temporary hiatus.

3. Re-examine your original retirement figures. In certain instances, it will come to a financial advisor’s attention that a client is actually saving too much in a retirement plan. The result is not an abundance of cash in retirement, however. Because of some tax structures, retirees will end up seeing less money in the end. Make sure your calculations are accurate so aren’t doing yourself an injustice later.

4. Don’t set arbitrary limits on your life. Whether the market has sunk or begun to bulge, don’t let that decide your life’s trajectory. Turning 65 shouldn’t mean the same thing for everyone in the world. If retiring at 67 will make your savings increase substantially, wouldn’t it be worth the extra effort? Another option is to work part-time to make up for the impact tough economic times had on your savings.

5. Use the tax-friendly resources while you have them. Tax-protected plans are one of the best ways to keep retirement plans going. The trick is you have to use them. Over 30% of those with access to these plans are not using them. Setting up automatic deductions is an excellent way to keep it going every month, regardless of what’s happening in the markets.

There are some things that should never be compromised in life; retirement plans should be right at the top of this list.

Gnifrus Urquart realized you need to begin saving for retirement as soon as you can. This is why he set up his own DIY superannuation and looks to Premier for Self Managed Superannuation Administration.

budgeting, Finance, investing, Money, pensions, Personal Finance, retirement, retirement savings

January 9th, 2010 by Damian Papworth

Most of us take for granted that our government will always be able to meet its obligations. Believing in our government’s stability is taught in schools from an early age. However, things do not always work out so perfectly. In the case of government pensions, it’s unwise to assume all of the money promised can be delivered to time, causing concern as retirement approaches.

Governments are not invulnerable to crises, as many learned from the second and most disastrous of the recessions which hit the global community in the first decade of the 2000s. With some governments literally going bankrupt and others teetering on the brink of financial ruin, it became clear how much a government has in common with a huge corporation. On the one hand, corporations can be more flexible than governments, as the bottom line is the primary concern. The constitution need not interfere with the liquidation of one part of the company. Still, when there are bills to be paid and obligations to be met, neither can continue operating until a solution is found. With a lack of funds to pay retirement pensions when they become due, a government may need to turn to changes in the tax codes or to loans from foreign sources.

For anyone worried about the possibility of finding a deficiency in a government pension, the only answer is to prepare another form of income in the meantime – a support system. No matter how modest such a plan is, the backup could be the key to living comfortably while the government figures out how to fulfill its obligations.

Financial advisors will recommend having a multi-layered plan in place for when you expect to retire. In other words, on one end, the pension you have built up will be ready to kick in, while other assets should have the potential of being liquidated. Real estate investment is an excellent choice in this regard. Despite sudden shifts in the market, real estate will bring back more than it was worth when purchased. The longer one holds onto a property, the truer this projection becomes.

Saving for retirement involves seeing the big picture of the financial world. Putting all of your eggs in the same basket – like the stock market – may lead to sudden shifts in wealth. Thus, if you are planning to retire and the markets take a nosedive, you may have to change your plans and keep working until the rebound takes place, if it ever does.

Liquidity is a key element of any excellent financial plan. As you advance in age and can see the day in your near future when you might retire, this element becomes even more important. Expecting a large return on an investment may be a foolish move – this mistake has led to the deficiencies in government pensions.

If you are looking to retire and have no investment property, selling the house you live in may solve short-term problems. Immediate cash will become available, while you can simplify your life in many ways by renting.

The reality is that maintaining financial security is never simple, and this struggle may continue several years into retirement.

In Australia, Gnifrus Urquart understands it is crucial to own an SMSF. Self Managed Superannuation Funds at the minimum own the opportunity of covering retirement saving requirements.

budgeting, Finance, investing, Money, pensions, Personal Finance, retirement, retirement savings