Diversifying to avoid living beyond your super

There are three major pillars of income for the average Aussie retiree: The age pension, super, and private investments. It's estimated that a single person would currently need upwards of $500K to comfortably support themselves through retirement, and that number will only continue to rise, especially if Netflix keeps pumping out documentary series on the secrets to longevity.

If you're not sure you'll qualify for much of a pension, and your super won't cover the shortfall, where does the rest of the income come from? First of all, don't panic. This is where diversifying your investments now goes from being a solid option for people who are already into investing, and becomes a smart move for anyone keen to live a long and comfortable life.

What are some of your investment options?

If you're comfortable with navigating the ups and downs of market volatility or have many years before retiring, you might consider ASX or international shares as part of your investment strategy. If you're thinking mid-term, it's worth investigating the pros and cons of Exchange Traded Funds (ETFs, as we've covered previously), which focus on a 10-15 year investment horizon. Many Managed Funds also track the market. Your money is pooled and investment decisions are made by professional Fund Managers, sometimes with the opportunity to earn dividends or interest when the Fund makes profits from its assets.

Property is a popular inclusion in a retirement investment strategy, which, (as long as you're not saddled with eye-watering mortgage repayments), has the benefit of providing rental income long after you've decided to put your feet up. There are also Annuities, or other lifetime income products. These are usually offered by insurance companies, and provide 'longevity insurance', which is another way of saying they guarantee an income until death. They aren't as popular in Australia compared to other markets and- the main downside is that you can't withdraw your money as a lump sum so your funds are locked away until the annuity term expires.

As the cash rate has risen over the past 18 months, so too has the interest rate on savings accounts, with some of the best deals now hovering around 5%. Personal savings and term deposits can be a great source of income for retirees.

For generally lower risk, and consistent fixed returns, Fixed Income is a strong option. At Blossom, we found so many of our customers wanted to use our savings app (which provides seamless access to returns from Fixed Income investments) for their retirement funds, that we created a simple online onboarding process for individuals with a Self-Managed Super Fund.

No matter what you choose, remember that the power of compounding means it's best to start now. The biggest asset you can give yourself in retirement is independence, and some smart choices today will result in a lot more freedom later.

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Sisters Ali & Gaby Rosenberg are the co-founders of Blossom App.