Can You Live on an Income?

Each path of investment, savings and management of one’s assets must necessarily adapt both to the economic circumstances and to our needs, needs that can only change with age.

Today I deal with investments and savers over 65 years of agean age that with the lengthening of the average life and life expectancy has become one third youth rather than old age.

I invest differently from what we’re going to see but my choices are related to age: with the passage of time our needs change too.

In any case, there are a series of principles that you must keep in mind if you are approaching the world of investments and you who have much more experience than me, I imagine, have seen a lot by now.

The world has changed a lot in recent times, if you’re a careful person you’ve stayed on track or you may have missed something if you’ve been busy with something else.

For these reasons, to you more than to others, I advise you to take a look at mine free video report “Invest with Common Sense” where you will find a presentation of our operating methodology.

Now let’s get into the merits of our article.

Needs change

This age generally coincides with a series of different needs and problems compared to those experienced in a previous stage of life. Let’s see some useful reasoning to do about it.

It is reasonable to expect at least 20 years of life without work

L’retirement age it rises, but life expectancy rises almost hand in hand. According to the most recent data, men can live with an expectation of around 83 years and women have just passed the 85-year threshold.

From an economic point of view, this means getting organized by redesigning your assets, getting rid of those that are now useless or too expensive, and also organizing yourself to have a nest egg to deal with any therapies and health problems.

The economic characteristics of the elderly

How does the situation change after the age of 65? The data released by ISTAT, the laws in force on the subject of pensions, the data from the Ministry of Health tell us:

• According to data released by ISTAT, at the age of 65 we have just exited the period of our life with the maximum disposable income;
• You begin to receive your pension, or at least you will shortly thereafter, which will be only a percentage of the last income received;
• Ailments, pathologies that need long-term treatment, expenditure on medicines are on the increase;
• In all likelihood you have now finished paying any mortgage, and you should have your own home;
• The children, for whom we have worked so hard and set aside, should hopefully be autonomous at this point.

We are facing a real upheaval in our finances, and our savings and our assets can only adjust.

Are you sure you need the same house as before?

Magari hai bought a housewhich now plays an emotional role, will have seen your children grow up, their spouses arrive, will have been the scene of the bulk of your family’s joys.

However, the sentimental value, if attached to an asset of such value and which involves huge expenses, does not always make sense. Are you sure you still need a house that size, with those maintenance costs, in that specific area of ​​town?

Reducing one’s real estate needs is absolutely not a choice of impoverishment, on the contrary. You may be considering selling your property for:

• Buy one with lower maintenance and lower value;
• Free up capital for more profitable investments;
• Leave, in case, your children with more liquid and more easily manageable assets.

I have written a lot on the subject of real estate, here are some guides that can help you:

The problem of inheritance tax

L’inheritance tax it is a bogeyman that has led many to make simply crazy choices in terms of assets.

For those in possession of substantial assets, exceeding one million euros, an inheritance tax still applies with a deductible of up to 100,000 euros at 4%, a substantial sum to be paid in taxes in the event that the bequest is not for relatives in line straight.

Is this something we should be concerned about? Yes, even if choosing bonds or health policies precisely because they have a non-taxable premium at the inheritance level is a very bad idea, and I’ll explain why with two very, very simple calculations:

1. Bond yields are rarely able to match inflation;
2. I life insurance commission costs and premiums are well over 4% even over a couple of years; you’re not making a big deal here either.

Whatever the size and composition of your portfolio, orienting yourself solely for the purpose of avoiding inheritance tax is not a good idea: the pleasure of paying nothing to the state would cost you a lot in terms of assets.

If you haven’t made a will or want to learn more about this last aspect, I suggest you consult the following resources:

Stock market: why is it not an enemy of retirees?

Even if you have a low propensity for risk (and this should decrease over the years), remember that life does not end at 65 or even at 70 and that markets that require a medium-long term investment, such as cashier actionsare still a choice you have available.

Absolutely do not believe the bank, ready to swear that every 7 years the stock market is necessarily in a positive trend compared to the starting point (think of those who invested in 2004, just to get an idea, or even those who invested in 2008 ).

What I want to tell you is that even in old age markets that perhaps common sense invited you to avoid are still quite performing and interesting.

In addition, a lot depends on what you want to do with the money you want to invest: if your aim is to pass it on to your heirs, the issue of the time horizon takes a back seat because future management will be their problem and, if they are more younger than you, they will have plenty of time to recover from any crises.

Government bonds: to be handled with care!

Government bonds have tried to make us swallow them in every conceivable way: rate of tax reduced to 12.5%absence of inheritance tax, a thousand or perhaps more repayment methods, with or without coupon, with plans of 1, 2, 5, 10 or even 50 years.

However, there is only one indisputable truth: yields, despite having returned above zero starting from 2022, are not always satisfactory because in the long run bonds rarely outperform inflation.

In addition, bonds are not risk-free: to learn more, read the general guide dedicated to bonds.

Real Estate: Is It Still Worth It?

The brick it’s not an investment, or rather, it is not if we are not willing to manage it as if it were a financial/economic asset. On Affari Miei you can find in-depth guides to transform your property into a source of income (no, there is not only rent!) or to buy one for the same purposes.

However, to think that by buying a house you are automatically getting a good deal is something as stupid as it is rooted in the Italian mentality.

I invite you to follow the mantra that has always animated the pages of this masthead: mind your own business and don’t care what others think.

ETFs better than mutual funds

When you have some money to save you are cannon fodder, a potential carcass for the vultures of various species that fly overhead.

The worst? Managers of Mutual funds, that when they lose to the fund they lost your capital and still took management fees from you, and that when the fund gains they take not only management fees, but also commissions on the profit. It’s a game against a dealer who draws you out of your pocket, and against which you can never win.

An alternative that still guarantees managed savings, differentiation and modularity of the investment?

Surely the ETFfunds linked to the performance of indices, which allow you to invest intelligently, with commissions up to 90% lower and which often offer you better returns than benchmarkas opposed to what happens with mutual funds.

To know more:

Insurance: go back!

The last few years, in the world of savings, have been the years of total mingling between investment and insurance: the main companies and institutes now offer, along the lines of what was born in the USA, hybrid products such as life insurance policies.

Also on this topic I have expressed myself several times in not entirely positive tonesfor the reasons that I will briefly summarize:

1. Part of the premium goes into insurance matters that are difficult to understand, in proportions to be traced in the contract (even this very complicated one), without having any knowledge of what we are actually buying;
2. When a “guaranteed capital” product is offered, we can still lose both because of inflation and because of the commissions and premiums due in any case to ensure… the capital itself;
3. The repayment plans are never clear, just as the calculation of what is owed to us at the end of the relationship is not clear;
4. They are restricted sums, with no guarantee of return and which we can only disinvest in extremely complicated ways, even in this case.

Even for the elderly, policies are a bad choice, except in specific cases, to invest your capital.

Live on the fat of the land? It can be done but it’s not as simple as everyone thinks

This is the ideal age to live on an income from a conceptual point of view: you’ve worked for a lifetime, you’ve put money aside, you just have to reap the benefits of what you’ve accumulated by managing your assets correctly.

If once the possibility could have been trivial (real estate and BTP were enough), today the situation has become much more complex. If you find yourself in this situation, I invite you to watch this in-depth talk in which we addressed the topic:

More mistakes to avoid

When managing assets of a certain importance (at this age it is common to have even hundreds of thousands or millions of euros) you tend to make a series of mistakes such as:

• Mistake #1 – Excess of complexity;
• Mistake #2 – Choosing the wrong financial instruments;
• Mistake #3 – Absence of estate planning.

We talked about it in this talk that I invite you to follow if you want to learn more:

Conclusions

We analyzed the situation together from YOUR point of viewtherefore, what you are reading is the vision that a person who is approaching 65 must have.

My statements, therefore, do not represent the absolute truth but are calibrated on the basis of your specific needs.

Obviously I speak on the basis of the beneficiary’s interests: if you are the son/grandson of someone over the age of 65, the music does not change, even if you may have a different view dictated by your age.

If you want to learn more, I invite you to follow the free video report “Invest with Common Sense” in which I explain how to protect your money from the aggression of external agents interested in your capital.

Good luck!