Why a Pro-Active Passive Income Plan is the Key to a Stress-Free Retirement

A recent survey by Investment Trends showed that 87 percent of Australians over the age of 40 have concerns over their retirement. The main concerns were identified as not having enough money to buy the basic essentials, failing financial markets and becoming a burden on the family.

These are eye-opening statistics, made even more so by the fact that so few people over the age of 40 have actively prepared for their retirement. In fact 68 percent don’t have a retirement savings target and 43 per cent don’t have any retirement plan.

Investing in property or other asset classes can help you create a passive income – which is the key to supplementing superannuation and giving you the peace of mind that you will be able to enjoy the retirement you deserve.

When to Start?

It is obvious, but still worth repeating: decisions about retirement need to be made well before retirement.

If you create a passive income generating plan by building an investment portfolio when you start earning a good salary, it will help you to start earning compound interest on your money and this makes a huge difference to your wealth over the years. The earlier you start, the sooner your money starts growing and, by the time you actually retire, all the hard financial work will have been done and you can sit back.

This has become even more important in recent times because Australians are living longer; retirement may be 20 or 30 years with good health. That’s a long time to plan for and pensions and super will probably not be enough.

Being Proactive

It’s important to create a plan to achieve the retirement you want. First what does that retirement look like and how much it is likely to cost? There may be several “phases” of requirements – for instance, younger retirees might want to travel and will stay active, while later on, they may prefer to stay more local.

Calculate approximately whether your projected income and superannuation payments will cover your retirement needs; if it’s not enough then talk to a financial planner and devise ways of growing your savings and creating more passive income streams.

Inactivity is not an Option

It’s surprising how many people believe that not investing removes the risk and is therefore the best option.

While we all know the perils of rushed decisions and not doing our homework on investments, inactivity can be just as much of a sin, if you are aiming to create wealth.

It comes down to risk and return. “Avoiding risk” by keeping your savings in the bank may seem like a safe option but it isn’t really – as it may be keeping your money just ahead of inflation. If you have access to sound investment advice, you should use it; otherwise you risk not getting the returns you should be getting, so it is counter-productive.

The key is in an investment strategy that minimises risk and maximises potential returns. This policy rarely fails, good advisors help you identify opportunities to increase your wealth by capital growth in investment markets.

Retirement should be a time of enjoying the fruits of your life’s work, not stressing about whether you will have enough. The last thing you want is to have all the time in the world, but no money to enjoy it. Starting early with an active passive income plan, rather than sitting back and expecting your money to grow without taking any risks, will make your dream retirement a reality.

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