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Retirement planning: with saving pots

Financial security in retirement through a holistic wealth management concept.

Published on 18.06.2024 CEST

For most people, the transition to retirement marks a significant turning point in their financial situation. Using savings pots can help you avoid financial straits and assist with structuring your assets in a meaningful way in retirement, considering your personal goals and wishes.

 

With the start of the third stage of life, not only does your familiar day-to-day structure fall away, but the organization of assets must also be considered from a new perspective. Income from employment is no longer available and is only partially compensated for by pensions. In addition, the savings rate that contributed to the accumulation of wealth during employment will cease to apply. At the same time, in some cases, expenditure even increases after retirement, often due to more time for leisure activities.

This often leads to a rethink among those affected, resulting in the following questions: How can I structure my savings in such a way that I can maintain my standard of living while minimizing the risk of financial shortfalls? How can I ensure that my assets are not used up prematurely and are sufficient for my retirement provision until the end?

Using savings pots is a way of addressing the challenges of securing income in old age and managing assets efficiently and systematically. With this method, assets are divided into three main categories: liquidity, asset depletion & securities, and real estate.

Organizing assets using the “pots system”

Illustration: Organizing assets using the “pots system”

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Illustration: A liquidity buffer of 6 to 12 months’ living costs enables you to maintain your standard of living and cover any day-to-day and unforeseen expenditures alike. The ongoing depletion of your capital can be alleviated by the value of securities investments and their yields. Real estate also provides a fundamental level of security, as it has a historical stability of value and can also generate a return through rental income.

1. Liquidity

In retirement, it is particularly important to have sufficient liquidity to rely on. This enables you to maintain your standard of living and adapt more easily to changes in lifestyle, which are often associated with new expenses. It is also important to have a sufficient financial cushion for unforeseen events. The right amount of this liquidity buffer varies from person to person, but a common recommendation is to have a reserve of at least 6 to 12 months to finance living expenses.

 

2. Asset depletion and securities

One of the biggest concerns of retirees is that their finances will run out prematurely. A combination of careful planning of asset consumption and investment in securities can significantly increase financial security in retirement and prevent the rapid depletion of financial resources. This pot is based on a comprehensive strategy in which both building blocks complement each other.

3. Real estate

In this system of savings pots, real estate provides a fundamental level of security. As they often experience both an increases in value and can generate e regular rental income, investments in real estate are popular. They also contribute to the diversification of your asset portfolio. This pot thus serves as a hedge and acts as a financial backbone in the system. Careful evaluation of real estate investments and professional advice can help you make the right decision when purchasing real estate.

Conclusion

A comprehensive wealth concept lays the foundation for financial security and a carefree retirement. The system presented here offers a structured framework for managing assets efficiently and promoting their growth through liquidity, asset depletion & securities, and real estate. Professional advice and regular reviews by experts are recommended to implement such a wealth concept, taking into account personal goals and needs. We will be happy to support you in planning and implementing a comprehensive wealth concept.

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Published on 18.06.2024 CEST

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