I’ve noticed in the last few weeks a troubling trend.
We’ve had a lot of interest in the book “ENOUGH?”, which we offer complimentary as a download.
When requesting a copy of this book we ask “What is your biggest financial challenge?”.
Overwhelmingly, “How much is enough?” is by far the biggest challenge people are facing.
I’ve noticed a theme going on here…that people are having difficulty creating their own retirement roadmap.
People are struggling to figure out exactly the steps they need to be taking.
I don’t blame them…it’s hard to fix it yourself…hard to critique your own situation. It’s definitely challenging to make sense of all the rules.
Completing your own financial x-ray becomes a challenge. Particularly if you don’t know what you’re looking for…
But here’s the catch…the longer you leave this issue unaddressed the more trouble you are going to be in later on.
You run the real risk of running out of money in retirement…
Knowing how much is Enough…
I know you’d like an easy answer for this question.
The fact of the matter is it’s actually a complex question to answer.
There are so many variables to take into account. If you get the number wrong on this…I don’t need to tell how this ends.
There’s questions around the lifestyle you want to live…
Your views around money and investments…
How long you expect to live…
There are many more questions that you’ll need answers too if you are going to get anywhere near an accurate number.
While there are many calculators online, they are generic and set certain assumptions. If only one of these factors is out of kilter, you risk retiring with too little.
Or you don’t understand how these calculators have been put together…it could end in disaster.
Sure, the money side is important…but it’s the lifestyle you want.
Understanding the lifestyle you want to live and the cost of that lifestyle is critical as you work towards your “ENOUGH” number.
Are you going to be travelling first class overseas every year or economy class?
Maybe months in a Tuscany villa is on the cards…
Are your annual holidays going to be short or long?
How often do you want to eat out at nice restaurants?
Will you caravan on a regular basis?
What type of hobbies will you undertake?
Will you be helping your children out financially?
How active will you be in retirement and how do you expect to live that active lifestyle?
There will come a time where you’re hips have gone…you’re knees have gone…in other words you’re knackered.
So you want to make sure you can life the lifestyle you want when you are fit and healthy.
As you’d appreciate, your lifestyle is unique, there is nothing generic about it…
How much money do you need for retirement…
This is where the rubber hits the road…
If you get your number wrong on this or you get it wrong from the beginning, you’re going to be in trouble later on.
Underestimate your lifestyle expenses…you run the risk of running out of money.
Overestimate your investment return…you run the risk of running out of money.
Live longer than you thought…you risk running out of money.
Don’t calculate enough safety margin in your plans…you run the risk of running out of money.
Apply the same strategy in your accumulation years to retirement…you run the risk of running out of money.
Hopefully you can see how serious this is…
Are you risking a happy retirement by leaving your planning too late…
Unfortunately many get lost in the complexity of planning one’s retirement…leaving it until it’s too late.
New research by the Moreton Group, shows worrying signs Australians have changed little in how they plan for retirement over the last 20 years.
In Moreton’s research, they found the average age people start thinking about retirement has moved from 58 to 59.
Sadly, this research shows Australians are no wiser when it comes to planning their next chapter.
Maybe it’s the complexity…maybe they are scared of life after work…or maybe they don’t know where to turn.
Either way…it’s not going to end well.
Combine that with the fact very few people have a written plan…
It’s no wonder the number one concern of retirees is running out money in retirement.
It’s something we see on a daily basis, people seeking advice…but would be in a far better position had they taken that step 5 years prior.
It’s one of the reasons we offer complimentary Retirement Success Sessions. A simple way to help you talk through your challenges, provide clarity and maybe a roadmap.
So you can get clear on a plan to achieve your retirement dreams before it’s too late.
If you’re open to it, you can book a chat here…
Glenn Doherty – CFP – Retirement Planning Specialist | Retirement Planning Made Simple for Over 55’s powered by Life-Centred Financial Planning