Over 70? It’s not too late to sort out your finances

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A lot of personal finance advice, especially in Australia, is pretty focused on making money and saving for retirement, not in retirement. Much of the advice on superannuation is about making extra contributions as early as possible, and even other investments such as ETFs often suggest you should be investing over a 10- to 15-year time frame.

However, many people, for myriad reasons, don’t get around to thinking about their finances until later in life, a time when you might not have the luxury of waiting 10 to 15 years for your investments to grow, and you may have missed the boat on early super contributions.

Conventional wisdom says to build a nest egg as early as possible, but good financial planning is just as important after retirement.Credit: Michael Howard

It’s an issue that affects women in particular, who retire with up to 25 per cent less super than men and often have lower levels of financial literacy.

What’s the problem?

Older Australians also – generally – have less flexibility in their finances. It’s likely they’ve stopped or are winding down full-time work and have most of their assets tied up in superannuation and their home.

What you can do about it

If you’re in this stage of life and pondering what to do with your money, here are some suggestions:

• Your super: No, it’s not too late to top up your super – your fund can accept voluntary contributions until you turn 75. This can be a particularly effective strategy if you’ve still got room under your transfer balance cap ($1.9 million) and can turn that contribution into a tax-free pension. If you’ve already reached the cap, any additional contributions will be transferred to an accumulation account, which attracts higher taxes, so check how much leeway you have before pursuing this option.

• Franked shares: If the 2019 federal election taught us anything, it’s not to mess with retirees and their fully franked dividends. And you can see why, as they can be a very effective form of income for those later in life, says Paul Benson, financial adviser and regular Money contributor. “Fully franked Australian shares could be attractive for those looking for a long-term investment with some income,” he says. “Provided the individual has been well advised and has the bulk of their investment wealth in a tax-free pension, then it is likely they can get the franking credits refunded on dividends paid, which makes the total income generated quite attractive.”

• Annuities: Lifetime income streams such as annuities are an oft-overlooked option for retirees. You invest a certain amount for a fixed term and receive a guaranteed income over a period of time. At the end of the term, you receive back the amount you invested. “An annuity provides a guaranteed income stream for life, and if you have a partner, you can make the income reversionary to your spouse, so it continues until the death of the last survivor,” explains Cara Graham, financial adviser at The Wealth Designers. Annuities can be a great way to guarantee income in retirement and can be used together with super and the age pension. If you want to find out more about annuities, you can read our explainer here.

• Your friends and your hobbies: Finally, investing your money and your time in things that fulfil you can be priceless as you get older. Retirement guru Bec Wilson says stopping full-time work is a catalyst for many people to seek out new hobbies or build new relationships. “Find sports, activities and organisations that keep you hungry to learn and grow as a person – take lessons, become better at things and challenge yourself to participate actively in community activities where others do the same.”

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek professional advice that takes into account their own personal circumstances before making any financial decisions.