From Doubt to Confidence: Harry and Sally’s Retirement Transformation

Harry and Sally had been thinking about their retirement for some time. But were struggling to make any meaningful progress towards having their questions answered.

Over the last year they had spoken to a number of financial planners. However, found themselves walking away more confused and frustrated than ever. It seemed the only focus was on selling an investment or financial product.

Harry and Sally came across our book, ENOUGH, which we offer as a free PDF.

They’d been reading our blogs for a while which resonated with them. They took the leap and booked a call with us.

From the outset, it was clear Harry and Sally had been frustrated by the previous conversations they’d had with financial planners. Leaving them lost, wondering whether they would be able to find answers to their important retirement challenges.

They were at the crossroads, wanting to create a plan to retire in a couple of years but still at odds at where to turn.

That was before we spoke with them and showed them a proven framework we use everyday to help people resolve their retirement concerns.

This is the transformation of Harry and Sally from Doubt and Worry to Clarity and Confidence…

Harry and Sally’s Retirement Challenge

Both had been diligent savers through their working life.

Harry had been in a physical job which was taking it’s toll on his body. He was ready to give it up before he was forced to retire.

Sally, on the other hand, was happy to continue working for a few more years.

The problem was, they had all these assets, super, investment properties and cash sitting in their bank account. But they had no idea whether they had enough to retire on nor how to structure their assets in retirement.

The danger for them was they didn’t know what they didn’t know…

Have you considered what you don’t know, maybe what you’re missing and the impact this will have on your retirement?

It doesn’t matter whether you have a hundred thousand dollars or multi-millions. Everyone has blindspots and gaps their not aware of.

Harry and Sally grown tired of managing their investment properties and wanted a more laid back, less stressful lifestyle.

They had plans to travel overseas combined with regular short trips within Australia. They’d become tired of their jobs and wanted more time to relax and pursue other enjoyable interests.

The problem was, they didn’t know if they had enough money to last them through their retirement years. They were fearful of making a mistake and running out of money in retirement.

Once we’d taken Harry and Sally through our framework, they agreed to come on board as clients and we started to help them map out their retirement plan.

What did Harry and Sally want out of retirement?

Here’s the problem with most people who plan their own retirement. They start with the money and what I call the sexy side of financial planning (investments and financial products).

It’s like putting the cart before the horse…

As we explored what Harry and Sally really wanted, it became apparent what was important to them.

• Make work optional – For Harry, being in physical role, he wanted the option to finish up if they were in a financial position to do so. Sally on the other hand was happy to continue working for a few more years.
• Feel confident in their finances – They wanted to have confidence in their plan that they would have enough to live comfortably in retirement. They didn’t know how far their money would go in their retirement years and were fearful of running out.
• Become more active and healthy – By focusing on their careers, they knew they needed more time to focus on their health if they were going to enjoy their retirement years.
• Be socially more active – While working they felt they didn’t have the time to meet new people or catch up with friends as much as they would have liked.
• Master new skills or knowledge – Both Harry and Sally were keen to pursue other interests they’d had little or no time for while working.

What are your retirement aspirations?

What financial needs did Harry and Sally have?

Let’s explore what financial aspects of their retirement they needed to plan for.

Here is what we came up with:

• Harry wanted to give up work asap while Sally saw herself working for as long as she needed to.
• A retirement income of $70k pa to fund their day to day living expenses.
• A number of overseas trips at a cost of $30k each.
• They had always dreamt of smaller trips throughout Australia to explore this great country of ours more. This was an annual cost of $10k pa for a number of years.
• A change of car every 10 years.

This might sound familiar if you are heading towards retirement. Most will have some version of this, perhaps mixed with helping kids out or something else financially.

Have you considered what you need to planning for financially in retirement?

What financial resources did Harry and Sally have at their disposal to fund their retirement?

To assist them in working out whether they would have enough money to fund their retirement we needed to identify their financial resources available to them.

They had a number of investment properties (which they wanted to sell), cash and money in their super funds.

There were no plans to downsize as they had moved into a newer residence some years ago.

All up they had approx $1.8m along with any income for as long as they worked.

Do you have enough financial resources to last you for the rest of your life?

Was their retirement plan feasible?

The BIG question on Harry and Sally’s mind was, can they afford for Harry to retire from his physically demanding job?

The first step was to understand the funds they had and did they have enough money to last them potentially for a 30 year retirement.

Being a retirement planner for over 20 years, I know there is one of two paths everyone is on.

One is retirement regret. This happens simply due to people drifting towards retirement. They take little action and at times leave their planning with little time to make any meaningful difference.

This can lead to one of two outcomes, running out of money leaving you with regret you did not do more to rectify the situation sooner.

The second outcome is going to your grave with too much money.

It means you spent your retirement years fearful of running out of money, underspending.

It means you didn’t travel as much as you could have. You worked longer than you needed too. You didn’t help your kids out when they really needed the help. It means you missed out on experiences and creating memories.

The second path is one that leads to your dream retirement. People on this path take decisive action. Not only do they take decisive action to get on the right path, but they continue to take decisive action along the journey to ensure they stay on the right path and don’t fall off.

After all life has many twists and turns…most you don’t see coming.

Once we put all of Harry and Sally’s financial information into our cashflow software. We were able to gain a line of sight on how they were situated in terms of whether their retirement was feasible or not.

We were able to deliver some good news to Harry and Sally. Not only did they have enough to fund their retirement lifestyle. They were in a position for Sally to retire when she was ready too.

There was some further good news for Harry and Sally. They could in fact increase their spending or build in more experiences and memories. Or they could live more comfortably.

Now, that is not always the case. Sometimes we have to deliver some bad news and help clients negotiate a feasible retirement plan they will be comfortable with.

But the job was only half done. We now needed to go away and work on making their plan more resilient and help them optimise their plan as much as they could.

Do you know if your retirement plan is feasible? You need to know…

Making Harry and Sally’s retirement plan resilient?

Once we had collaborated with Harry and Sally in terms of negotiating their feasible plan. It was time to make their plan more resilient.

Here’s what we worked on with Harry and Sally:

• Identified all the retirement risks and blindspots they were unaware of in their current arrangements. Most people heading towards retirement are set up for accumulation. However, as you approach retirement, maintaining this mindset can be damaging to your retirement. For Harry and Sally, there were changes they needed to make to build in safety margins.
• Building their retirement income funding strategy. A big part of planning for your retirement is working out where the money is going to come from to cover your living expenses. This did involve the sale of some of their investment properties. Combined with building a “War Chest” in their super so they were not a forced seller when share markets go down.
• An ideal investment strategy. Many don’t know how much risk they are taking in their super as they head towards retirement. Employing the wrong investment strategy in retirement can lead to devastation. We devised one that would get them through their retirement years without leaving them exposed.

Now their plan addressed all the blindspots and retirement risks they were unaware of. It was now time to optimise their plan.

What blindspots and retirement risks are you missing?

Optimising Harry and Sally’s Retirement Plan

When you are crafting a retirement plan there are many rules and regulations you need to get your head around. It’s difficult to make sense of them unless you are an expert working with them everyday. We’ve seen many get it wrong and it’s cost them a heap of money and in some cases their dream retirement.

In terms of optimising Harry and Sally’s plan there were a number of tactics and strategies we implemented:

• The right investment setup. In terms of their super we identified a number of issues which if left unchecked would have seen them run out of money fast. We built out an investment strategy which would protect their income when share markets fell while allowing them enough growth to keep pace with inflation.
• Tax minimisation and super. For Harry and Sally, we identified a number of super strategies they had not taken advantage of at this point. If unused was going to leave them paying more tax than they should have. We built out a schedule to maximise the strategies they had not taken advantage of over the last few years. It had to be carefully planned for as it would take a number of years to realise it’s full potential. If they hadn’t done anything, it would have been gone.
• Maximising their legacy. While they wanted to use their money to fund a good lifestyle in retirement, they also didn’t want to pay the tax office any more than they needed to. We identified a number of areas they needed to address if they were going to avoid leaving the tax office a BIG tip on the way out the door.

Are you taking advantage of all strategies available to you? What are you missing?

A retirement roadmap they could rely on…

Harry and Sally now had a detailed retirement roadmap they could confidently follow and implement. Knowing that if they followed the plan they would be okay in their retirement years. Something they had been lacking for many years.

Their plan was methodically thought out using a framework (you check it out by clicking here) designed to achieve the lifestyle they wanted in retirement. While avoiding the common retirement risks and blindspots.

They had their roadmap, but we know life has many twists and turns and they will need to make changes to their retirement over time to ensure they don’t stray and stay on the right path in retirement.

What was the financial upside for Harry and Sally?

Obtaining financial advice should put you in a better financial position. For Harry and Sally their return was significantly higher than 10X their investment.

Everyone’s situation is different and the financial benefits will differ from person to person.

Here’s was the financial upside for Harry and Sally:

• Circa $35k saved in tax in the first year by using super strategies they had not been using with further to come in future years.
• Cancelling insurance they no longer needed would save them circa $8k pa.
• We identified the tax man was in line for up to a circa $80k tip if their super was paid to their estate. We implemented a strategy over a number of years to eliminate this.
• Reduced the level of risk in their investment strategy which would reduce the volatility in their investment portfolio through retirement.
• A “war chest” of conservative investments to fund their income in retirement without selling when investment markets fall (many get this wrong heading into retirement).
• They now have a retirement income guardrail in place which will ensure they do not run out of money in retirement. They can now either front load further experiences in their early years of retirement or spend more regularly each year.
• Harry can confidently hang up his boots.
• Sally now has the option of retiring earlier than she had thought.
• Reduced stress and anxiety leading into retirement.

All up an initial financial benefit in the vicinity of $100k plus. Not a bad outcome at all. Not only does good financial planning achieve financial benefits, it’s the peace of mind you cannot put a price on.

As part of the framework we took Harry and Sally through, they now had the:

Clarity they needed around the lifestyle they wanted to live in retirement and when they could retire.

Confidence they could afford their retirement lifestyle without fear of running out of money with extras built in.

Control over when they started their retirement journey.

While there is more to Harry and Sally’s retirement transformation, we’ve highlighted the main components. While every client’s financial outcome is different, it’s not uncommon to achieve these financial benefits as a result of the advice we provide to people we work with.

Have you ever considered what you might be missing in your retirement plan?

How much will inaction cost you in retirement?

If you are sitting there trying to make heads or tails of the magnitude of retirement information. Struggling to know where to start. Wanting to know whether you are on track to retire when you want to or know that you can retire without fear of running out of money. You want to know how to put all the pieces of the puzzle together. You want to know how to structure everything the right way.

Or you just want some validation that you are on the right track.

Don’t delay, book your Retirement Clarity call today where we’ll provide some insights and ideas on how you can gain clarity around resolving your retirement planning challenges.

If that’s you, book your Retirement Clarity Call by clicking here.…

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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