Overcoming the conundrums of retirement

Retirement is something most people look forward to.  It is a new stage of life where there is more freedom and flexibility to determine the balance between work and play.

Needless to say, making sure your finances match your desired retirement lifestyle is not an easy exercise.  It involves a lot of planning and there are many decisions and trade-offs – what you could call “conundrums” to work through.

Just consider for a moment the following complex and quite often interrelated questions –

  • When should you stop working?
  • How do you protect your portfolio from events like the GFC?
  • Can you be certain of your account balance at your retirement sate?
  • How much money should you be putting aside?
  • What about the changing rules and regulations around pensions?
  • How much can you afford to spend in retirement?
  • How do you make sure inflation doesn’t eat away real returns?
  • What if you live to 100?

There are some scary statistics when it comes to our preparedness for what should be a relaxing and enjoyable life event, in particular, 66% of us aren’t prepared for retirement, and most of us will outlast our savings by over 5 years.

However, as we explored in a recent client seminar, the steps you take now make all the difference when it comes to answering those questions and setting yourself up for a comfortable future.

Here are 4 key things you should keep in mind when it comes to planning your retirement:

  • Start with the end in mind – and be specific! – Spend time honestly thinking about what you want your retirement to look like. Be specific and even put dollar figures on your goals – doing so means we can plan for those and avoid nasty surprises in the future;
  • Try before you buy – Think you want to spend your retirement caravanning around Australia, or living with your children? Go for a test holiday to make sure you (and your children) are up for the change before you commit;
  • Overestimate what you’ll need – When it comes to estimating what we need for a comfortable retirement, our expectations are too low. A good rule of thumb estimate is somewhere around 2/3 of the income you are used to before you retire would help you maintain the same standard of living in retirement;
  • It’s never too early or too late – Circumstances change, unforeseen events take us by surprise, and what was important to us yesterday might not matter to us today; there are many levers we can push and pull that people aren’t aware of to improve our position, whether that’s in the short or long term.

If you’d like to discuss any of these points, the questions you might be facing, or your financial situation more generally, please feel free to take advantage of our no cost, no obligation consultation, which you can book online here or feel free to give us a call.