The thought of retirement for many can be exciting. Years of hard work to build your wealth that allows you to take your once in a lifetime holiday, to spend more time with your children and grandchildren, or to caravan around Australia.
And then minds can drift to the worry. Clients commonly ask me; do I have enough to last me for the rest of my life? Will I maintain my lifestyle? Will I be able to leave some money to my children or grandchildren like my parents did for me? What assistance will I receive from Centrelink?
It has been my experience that people who fail to plan generally experience these emotions in the lead up to retirement. Having a structured, well executed plan can be the difference between an exciting retirement without financial worry to a retirement full of concern about sustainability.
So, what do we do?
My suggestions are as follows:
Start planning early
Building wealth in environments like superannuation is a long-term strategy. Lowered contribution caps have reduced the ability to deposit larger sums into superannuation at or around your retirement date. Long term contribution strategies to build wealth in superannuation’s concessionally taxed environment can be extremely advantageous.
Discuss the strategy and the performance
Ensure you are discussing not only the performance of your fund with your financial adviser but your ongoing retirement strategy. Goal orientated advice is critical in any adviser/client relationship as it leads to the enjoyable retirement you are after.
If you don’t understand, it hasn’t been explained well
Jargon exists in all professions. Our aim is to build a trusted, long term professional relationship with our clients. This trust includes explaining portfolio performance and retirement planning progression in a way that we all understand.
Understand the risk you need to take
Knowing what return is needed to achieve your retirement is critical. This discussion could be centred around taking less risk due to the strength of your financial position versus taking greater risk to boost the return potential and therefore your wealth ready for retirement.
Know what you need
We commonly receive the ‘I don’t know’ answer when asking clients how much you spend each year. This answer is a foundation stone to any retirement plan. Simply put, the more you spend, the more wealth you need to fund your retirement. The risk of unplanned spending could be drawing on your funds too heavily which in turn puts the sustainability of your retirement at risk.
We can assist you to plan for retirement and the first step is simply booking in with one of our advisers to discuss your goals.