During your working life, your goal is to grow your financial resources through saving and investing, while at the same time ensuring that wealth is not eroded through loss of income or the breakdown of a relationship. In retirement, wealth is generally not added to, but consumed. However, the same adverse events that can affect you while you are working still apply and can lead to the erosion of wealth. It’s crucial to minimise the impact of these events.
As with other stages of life, it is essential always to have an emergency fund on hand – that is, money that is easily accessible without the risk of loss. Often this takes the form of cash held in a call account. Having cash on hand means debt is avoided. It also means that portfolios that change in value can, if necessary, be left untouched to ride out the ups and downs of markets.
A financially resilient investment portfolio is one that is fully diversified, and which includes growth assets to protect against the effects of inflation over the long term.
The loss of a partner through relationship breakdown or death can have a significant impact in retirement, which is difficult to recover from. The costs of living alone are far greater than half the costs of a couple. Many living costs, such as rates, insurance and internet, are fixed costs that don’t change when the household goes from two people to one. If a relationship breaks down, and this is increasingly common later in life, assets can be halved, leaving both parties in a poor financial situation. Taking care of your health and your relationship is therefore vital for the protection of your financial resources.