It’s not unusual to experience a bit of anxiety when it comes to retirement savings. In Australia, we spend so much of our lives working that we want to feel that we are heading for the reward we deserve. Everyone wants to be able to achieve a comfortable retirement, but many of us are not exactly sure how to make this happen.

There are many strategies available to Australians looking to save for retirement. However, one of the best methods is to target something known as wealth generation. Rather than relying on your savings, and hoping these reserves last, you can create wealth during your retirement.

Let’s take a look at how this works. Read on below as we examine this in more detail.

SMSF Investment

Your retirement savings are not static. In Australia, funds placed in a self-managed super fund (SMSF) will be invested across a range of different asset classes, with the intention of earning an income for you when you retire. Basically, if your investments are performing well, they can deliver a strong set of returns that you can use to augment your income from other sources, such as the Age Pension you will receive when you become eligible — which will be when you turn 67 years old from July 1st, 2023 onwards.

In fact, the Association of Super Funds of Australia (ASFA) factors this investment return into their calculations for comfortable retirement savings. The ASFA’s projections are based on an investment return of 6% each year. This is not guaranteed, but it is certainly achievable for Australians with an SMSF.

Account-Based Pension

An account-based pension essentially releases some of the funds that are bound up in an SMSF, providing retirees with a reliable income once they have finished working. The rest of the funds remain invested as part of the super, and can potentially still be used for wealth generation provided that the investment performance continues to be strong. The viability of this option, and its duration, depends on the amount of money you have been able to add to your SMSF during your working life.

Bear in mind that the amount of money you draw from your account-based pension can impact the Age Pension you receive. These funds are classed as ongoing income during retirement, and this may be used to calculate your pension entitlement.

Investment Outside of the SMSF

During your retirement years, your investment potential is not limited just to your SMSF. You can choose to invest in many different ways, augmenting the income you receive from Age Pension entitlements and from account-based pension payments.

Investment options available to you include fixed-income managed funds and exchange-traded funds, as well as term deposits, shares, and other assets. All of these options can potentially provide you with a reliable income during your retirement years, but there are always risks involved with investments. It may be worth discussing your options with an investment professional, so you can seek out ways to protect your retirement savings while investing in Australian and international markets.

Asset Utilisation

There are many different ways to achieve wealth generation during your retirement years. However, for this list, we wanted to avoid talking about part-time work, or anything that would involve delaying your retirement while remaining part of the workforce. Instead, we want to focus on how you can achieve wealth generation even after you have finished working. Asset utilisation is one of these options.

With asset utilisation, you are making the assets you have acquired work for you. Typically, these assets will be properties of one type or another. For instance, if you have purchased a holiday property, you can receive rental income from paying guests when you are not using it. If you own a commercial property or similar asset, you can rent this out to a business owner in your area.

Understand Your Wealth Generation Options for Retirement

Don’t get overwhelmed by the idea of retirement. Instead, seek the expert advice you need as you target wealth generation and a comfortable retirement. Here at Sydney Brokers, we help our customers to find the financial products they need — products that are perfectly suited to their situation. Reach out today and let’s discuss how you can optimise your retirement savings in Australia.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.