Does spending down your assets in retirement scare you? (How to get it right)

Imagine the prospect of watching your hard-earned savings diminish as you enter retirement.

For many, the idea of spending down investments can be daunting, even frightening. As one prospective retiree candidly put it, “Spending down rather than accumulating investments scares me.”

The shift from building wealth to spending it can be daunting…

But fear not, because with the right planning, navigating this transition can be less intimidating than you think.

Understanding the Fear:

Retirement marks a significant shift in mindset and game you must play. You start to transition from the accumulation phase, where you’ve spent decades diligently saving and investing, to the decumulation phase, where you begin to spend those savings.

The fear of spending down investments is not uncommon among retirees. The prospect of seeing those savings diminish can trigger anxiety and uncertainty. It’s a psychological hurdle that many face as they approach retirement.

It’s up there with the fear of running out of money…

It’s no longer about how much you can save and striving for high returns. It’s all about how you can manage the drawdown of income over your retirement years without depleting your assets too early.

The Importance of Proper Planning:

However, the key to overcoming this fear lies in strategic retirement planning. Not only do you need to understand how you are going to extract your income in retirement. You have to manage the BIG three retirement risks at the same time, sequence of returns risk, inflation and longevity.

This all requires deep analysis and planning around how you extract your income from your assets in a safe manner. One which allows you to spend confidently in retirement over 20, 30 years or more.

By developing a retirement plan tailored to your unique circumstances, you can alleviate concerns about spending down your investments.

A well thought out plan helps you understand how you can safely spend each year, where your income will come from and how to manage your investments safely to support your lifestyle.

It gives you a roadmap for managing your finances in retirement, ensuring that you can enjoy your golden years with confidence.

You may want to watch our latest video here where we discuss the challenges of investing for retirement particularly when withdrawing income from your assets.

Risks of Not Planning:

On the flip side, failing to plan for how you will extract your income from your investments can have serious consequences. I’d go as far to say, many are at risk of poverty in retirement if they do not plan for this adequately.

Without a comprehensive retirement plan to guide you, you expose yourself to outliving your savings or depleting your nest egg prematurely.

It’s a high stakes game, and the repercussions of inadequate planning can be severe.

Urgency of Acting Sooner Rather Than Later:

Many think they can leave their planning till just before they retire. What they don’t understand is that retirement planning takes time and some strategies take years to implement.

You need to understand your blindspots while you have time to do something about them.

That’s why it’s crucial to act sooner rather than later. The sooner you begin retirement planning, the better prepared you’ll be to address fears and uncertainties about spending down your super and investments.

I’ve never had someone come to me and say, “I should have waited longer to do this.”

Early planning gives you the time and flexibility to make informed decisions and course correct along the journey.

How to Get Started:

So, how do you get started? The first step is to determine if your retirement plan is feasible. This is best done with professional guidance from a financial adviser who specialises in retirement planning.

They can help you assess your financial situation, build out your feasible retirement plan, identify blindspots you can’t see and craft a retirement plan you can be confident in.

Fear of Spending Down Your Assets in Retirement Can be Overcome:

While the fear of spending down your assets in retirement is understandable, it’s not insurmountable.

With strategic planning, in-depth knowledge and pro-active decision making, you can confidently navigate this transition and enjoy a fulfilling retirement.

Don’t let fear hold you back from securing your financial future. Take action today and embark on the journey towards a worry-free retirement.

Book your Retirement Clarity Call with Glenn by clicking here where we’ll help you identify the current gaps in your retirement plan, provide insights and a gameplan to resolve those critical gaps.

Glenn Doherty – CFP – Financial Planner | Retirement Planning Specialist |Retirement Planning Made Simple for aspiring happy lappers and avid travellers within 7 years of retirement

We work with people in Adelaide and around Australia virtually via zoom!

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Achieve some clarity and maybe a roadmap on how you can achieve a comfortable retirement.

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Advice Disclaimer: Any reference in this publication to the provision of advice refers to advice of a generic nature, and should not be taken as product or investment recommendations. Before any action is taken based on the information provided, independent financial advice from a licensed financial adviser should be sought. Financial Freedom Project Pty Ltd ATF GA & DC Doherty Family Trust Trading as Jigsaw Private Wealth is a Corporate Authorised Representative of Spark Advisors Australia Pty Ltd. The information contained in this publication is of a factual nature only and is not intended to constitute financial product advice. Information is current as at date of publication. This is an online information blog. It does not imply an offering of securities.