The Party is Over!
As you say goodbye to the water-cooler brigade having just turned 66 and you’re headed to that great big abyss called retirement you may be feeling a small dose of nerves setting in. The retirement party in your honour was a great success but the glow is starting to fade even as you walk out the door. The big question now is; how long is the money going to last and even more important will it last as long as you do.
The Best Ways to Invest After You Retire
Now that the reliable paycheque is no longer coming in the door it is time to start investing wisely and safely. A review will need to be carried out on investments already made to figure out whether the portfolio balances the need for growth, safety and income. Three factors need to be looked at; flexibility of budget, source of retirement income and ability to tolerate risk. The following are two different approaches:
1. The Bucket Plan:
A bucket formula will essentially split savings into three pieces to be used at the three strategic times of retirement. Early, middle and late.
2. The Cover the Basics Plan:
This approach will use fixed sources of income such as pensions and immediate annuities.
Both approaches will do the same job; that is to calculate the difference between monthly expenses and a regular source of income.
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A good option for retirees would be to choose the minimum deposit which ensures that never lose more money that what they invest. This is possible at Monecor (London) Limited.
Cover the Gap Between Cost and Income
Instead of gathering a large cash hoard to cover the gap between costs and income it is advised to deal with the portion of the gap that applies to fixed expenses separately. Some experts advise using an immediate annuity for this portion of the gap. This would work much the same as a pension.
In the case of immediate annuity, the retiree would invest a lump sum of money with an insurance company. The insurer would then pay the money back to the retiree including interest. This will guarantee that the monthly payments will last for the exact same time as the retiree. This would cover all fixed expenses and also permit greater risk taking with the remaining assets. It is highly recommended to avoid locking in money at low rates, it is better to buy immediate annuity with a portion of savings and then at a later date another investment can be made. This will guarantee higher pay-outs.