Retirement Planning 101 - Back To Basics
When we talk about retirement planning most people think about the financial side of retirement. While this is a very important part of retirement planning I believe it is only part of the bigger picture; I prefer to take a more holistic approach with clients.
While some of us count down the days, for a lot of people the big fear is suddenly not having a purpose in life. I can play as many games of golf or have lots of cups of coffee, but why am I doing these things. Life is pretty empty if I do not have a purpose.
We all have different timeframes and reasons for retiring. Often 65 is the accepted age as this is when we all become eligible for National Superannuation. However, more and more of us do not retire at age 65. Some have dreams and bucket lists to tick off and retire much earlier while others of us are now working much longer. There are a variety of reasons including needing or enjoying extra income, the mental stimulation of the work, the comradeship of belonging to an organisation or maybe your partner still works and you would prefer to carry on working rather than doing things without your partner. Some of us have physical jobs and our bodies just can’t keep going.
Whatever your reason for and when you do eventually retire there are some things you should consider:
Look After Number One
Keep active and look after your health. The old saying ‘use it or lose it’ is very true. You can belong to a gym, go for regular walks, gardening etc. Swimming and biking (look at the surge in e-bikes) are non-weight bearing so can suit a wider range of people. These activities can be done with others. This provides that important social contact and can help motivate you on those down days.
As well as staying active, there is little more important for enjoying your retirement than maintaining a healthy diet. This helps keep the body functioning and enables you to enjoy your exercise and activities a lot more. When you are retired you have a lot more time to pop down to the local café where you are tempted by all sorts of goodies!
Maintaining social connections is important for our mental health and safety. If you do not have family and friends nearby it can be a good idea to have someone check in with you every few days. Perhaps you know someone in this situation now that you can check in on.
When we are working, paying off a mortgage, saving for retirement and generally trying to get ahead we tend to have ‘bits and bobs’ everywhere. As we get towards retirement it tends to get harder to keep track of things and more importantly, what purpose each investment, savings account, insurance policy etc has in regard to our retirement. As we get older, simplicity tends to be our friend. Simplify matters so they are all working towards the one goal of giving you as an enjoyable retirement as possible.
...you can have anything you want, you just can’t have everything you want.
Sort Your Life Admin
It is most important that you have an up to date Will and just as important are Enduring Powers of Attorney. These documents should go hand in hand and be reviewed as one.
I often get asked “How will my loved ones know who to contact if I suddenly pass away?” My advice is to keep a note book or small folder that has the important contact numbers such as your lawyer, accountant, financial adviser etc so they can be easily contacted. You may also like to include information such as a favourite hymn, song or reading you would like at your funeral. Maybe where you would like any donations to go. Make sure a loved one knows where this is kept, such as in the drawer under the TV.
Know Your Retirement Stages
Research tells us that retirement tends to come in three stages; ‘all go’, ‘go slow’ and ‘no go’. Typically, these stages last around ten years each. Your budget planning needs to reflect this. In addition, those long-haul flights to Europe are much harder as we move through our seventies so our travel costs (apart from travel insurance) tend to reduce.
I have a 96yo client who tells me the only thing she really needs now is a new pair of slippers. The only problem is she cannot move fast enough to wear the current ones out.
This same research tells us that our cost of living can reduce up to 25% as we move through retirement.
Plan Your Goals
Now for the financial side of retirement planning. As already mentioned my approach is to keep things simple and easy to understand with all decisions moving towards the same goal. When we work with clients on retirement planning, we start by helping you to work out what is important to you and what is achievable. Remember, you can have anything you want, you just can’t have everything you want. From these discussions we can recommend an appropriate investment structure that should enable you to achieve your goals. This will include considerations such as; what income you would like to enjoy through retirement, are you a keen traveller, do you want to leave funds for grandchildren, can you unlock some equity by moving to a smaller home or do you have other financial goals? It all starts with a conversation.
Retirement and the retirement planning process is probably the third major financial decision we make in our lives after our first home purchase and having children. It should not be taken lightly and is a process that a good financial adviser can add real value to. For advice personalised to your situation, get in touch with a Lifetime Adviser, it’s never too early and you’ll be glad you did!
Disclaimer: This article has been prepared for the purpose of providing general information, without taking into consideration any particular investor’s objectives, financial situation or needs. Any opinions contained in it are held as at the report date and are subject to change without notice.