One Transition You Must Get Right If You Want The Confidence To Spend In Retirement

The financial services industry can replicate the glitz, glamour and lights of the Las Vegas strip…

Everywhere you turn there’s a super fund trying to tell you they have the best return. Investment Managers promoting new, sexy and cool investments promising good things. Even the news channels play their part by inflicting fear into us at every turn…

It’s not easy if you add into the equation your ability to transition from your accumulation years (working years) to decumulation years (retirement years).

It’s a concept many struggle to grasp no matter how much wealth they have. Whether they have a little or a lot, it’s the blindspots they can’t see that’ll get them at some stage..

Transitioning from saving, maximising your investment returns to build your nest egg to spending it, it’s a BIG adjustment.

One, many struggle with navigating this critical transition. One which needs to planned for many years prior to retiring.

I can’t emphasise this enough, IF YOU GET THIS WRONG, THERE WILL BE TROUBLE LATER ON…

If you don’t prepare for fluctuation in investment values, you’re at risk of outliving your money.

If you don’t know, “How Much Is Enough?”, for you. You risk either running out of money or not spending enough (yes that is a risk, it means you didn’t do enough).

If you don’t review the level of risk you are taking, you expose yourself to churning through your money faster than you expected.

You can only retire when you have “ENOUGH”. Maybe you can retire earlier if you are structured the right way or plan earlier rather than later.

You can screw everything up if you are not structured the right way.

If you are overconfident, you risk making assumptions and decisions which will hurt you in retirement.

These are areas we can help with, giving you clarity and confidence to know you’ll be okay financially in your retirement years. Giving you the confidence to spend confidently and freely so you can enjoy your retirement years. Instead of living frugally or living in fear of spending too much.

Planning your retirement is complex. Having a plan for transitioning from your accumulation to decumulation years is critical to whether you experience success or failure in retirement.

If you’re vague or ill-prepared, you will experience a frugal retirement or feel real regret that you weren’t decisive early on…

Acknowledge Your Feelings and Emotions

Retirement can be an anxious and stressful transition. It can feel like you’ve got a heavy weight on your shoulders.

Not only do you have the financial aspect to figure out. Making sure your money lasts…

You’re faced with a loss of meaning. Filling the void of work for the last 30 or 40 years. Worried about how you’re going to fill your days post work.

While some have no problem transitioning from work into retirement. Many struggle with how they fill their time. If that is the case, maybe a soft retirement (semi-retirement) is the go.

Your feelings and emotions can and will impact your decision making either in a positive or negative way.

This is why it’s important to gain impartial advice from a professional, whether that’s us or another professional (FYI – we only have capacity to take on approximately 60-80 couples and individuals).

At this critical moment it’s normal to feel anxious, excited or even a little guilty about spending your money. After all, it’s got to last a long time in retirement.

All can be overcome if you have a framework to methodically work through all your options.

Shift in Mindset

After 30 or 40 years as a saver and investor, it can be difficult if not challenging to spend your money in retirement. After all, the last thing you want to see is your assets/super drop in value in your retirement years.

The fear of running out of money reins supreme for most retirees. For most, there’s no going back to work.

It’s critical at this stage to understand your options. Understand how your plan could potentially pan out over time. Only then can you put in place measures to manage your money and income prudently.

Retirement is a time for new horizons, new experiences or rekindling old ones. A time for reinvention. A time for living life free from worrying about money. The freedom of time to do more of what you want with the people you want.

It’s a time to enjoy the fruits of all those years building your nest egg.

But you must prepare and plan well for this stage of life if you want the confidence to spend freely and not be hamstrung by worry.

Something we are very good at helping clients with.

Book a Retirement Clarity Call by clicking here for a quick chat to brainstorm your concerns or challenges and we’ll provide some insights on how to resolve them.

We quite often hear from our clients after working with us, “I feel like a weight has been lifted from us”.

Why?

Because we understand intimately the issues soon to be retirees are facing and have a proven framework for achieving clarity, confidence and control over their retirement.

We take the time to understand what it is they want from retirement and lay all their options out on the table. It’s then up to them to decide what works best with our guidance.

Planning The Lifestyle You Want In Retirement

I love this saying by Hunter S. Thompson…

“Life should NOT be a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside, in a cloud of smoke, thoroughly used up, totally worn out, and loudly proclaiming “Wow! What a Ride!”

Does that resonate for you? It does for me…

So, what does a good life look like for you? I’m sure it’s not checking the sharemarket every morning and worrying how much money you have. Or worry about how much you are spending…

Many people who come to us have built up their assets to a point they think they might be on track, but struggling with confidence.

Many are looking for confirmation they have enough. Wanting to know if they are structured correctly for their transition.

In other words they want to know “Are We Going To Be OKAY”, so they don’t stuff it up.

Yes, it’s a numbers thing, understanding your numbers. But it’s also being able to maximise their life through experiences and memories. Not getting to the end of their life, looking back and thinking, “Why didn’t I do that?”.

It’s something we spend a significant amount of time on. Helping our clients get crystal clear on what they want out of retirement. Yes, we will even explore more if they are in a position to do so.

Andrew and Jess were a recent couple we worked with. They had a goal of retiring at age 65, currently in their late 50’s.

However, through our discussions, it became apparent, it was MORE TIME they were really wanting.

More time to spend with each other (Andrew had dedicated his life to work, which meant he wasn’t always around for his family). More time to focus on their family and other interests.

That’s where we explored why 65? It was a number they’d just plucked out of the air. So, we worked with them to figure out a way to create more time well before 65…

Cashflow Planning Is Key To Confidently Retiring

Sure investing and having the right structure is critical in planning your retirement. It’s your tools in the toolbox. However, the one overriding driver of your retirement plan should be cashflow planning.

Everything else follows from there…

Unfortunately, I’ve spoken to many people in the last couple of months who have financial advisers, however, have no idea how they are positioned for retirement.

This is a travesty…

Why is Cashflow Planning so critical?

It takes away all the noise, your personal bias and gives you the raw data to work with. It will help answer the BIG question, “Will I Be Okay?”.

It will help confirm any blindspots in your current plan.

It will help you confirm the investment return you need to aim for which in turns dictates the level of risk you take. Most people we work with, it means taking less investment risk with no change in investments returns.

It means they experience lower movements in their investments during turbulent markets. It helps them sleep better at night.

Knowing what your cashflow needs are over a longer time frame will allow you to set yourself up with more confidence. Allowing you to make confident decisions through retirement as life unfolds.

Your kids need some financial assistance, can you help them out?

Friends ask you to join them on a holiday, can you afford to go?

Your expenses increase for a period of time, what impact does this have?

Maybe you get the travel bug and want to go on more overseas holidays, what impact will this have on your assets longer term?

Keeping an up to date gauge of where you are financially is little like having your own GPS for retirement. You’re better prepared and able to make confident financial decisions swiftly.

A Plan Is Like A Roadmap

If you visit a new country, what’s one of the first things you want? A map…otherwise you walk around feeling lost, not knowing whether you’re walking in the right direction or not.

Unless you’ve visited previously, you want to know how to get around. It saves you time and you are better able to plan and navigate your days.

Retirement planning is no different. However, very few have a map on how they are going to navigate their retirement. Let’s be blunt for a second. There are going to be many roadblocks and challenges you’re going to have to navigate and overcome through retirement..

If you’re unaware of them and unprepared. Well, it will expose you in your retirement years.

Here’s the thing, if you’ve done the work, identified your blind spots, you are able to build in safety margins to protect yourself in retirement.

It’s alarming less than 40% have a clear plan for retirement.

You need to have a plan on how you are going to extract your income safely and not put you at risk of running out of money in retirement.

This is where a financial advisor who specialises in retirement can help. Whether that’s us or someone else.

We can help you scenario plan, put all of your options in front of you and make sure you are structured for this important phase in your life.

This can include how you plan for the decumulation in retirement, risk levels, cashflow planning, tax planning, investment planning and a whole lot more.

The work and the structure is critical to successfully transitioning into your retirement years with confidence and less stress and anxiety.

Revisit Your Plan Regularly

Just because you have a plan doesn’t mean you throw it in the drawer and never look at it again. A plan is useless if you don’t implement it.

Life has many twists and turns which guarantees your plan will need to change. Rarely does a plan go according to plan 100% of the time.

You may change your view on what you want out of retirement. Your children may need financial help. Investment markets will change. Governments may change the rules.

Or maybe you’ve had a life event that changes everything.

Either way, your plan needs to be reviewed and tested regularly to keep you on a safe path so you avoid pain later on. It also creates a framework for thinking through events that will occur in retirement with poise.

Professional Guidance Will Provide Peace Of Mind

Whatever your views are on seeking professional advice. If you work with a retirement specialist, you will gain more clarity, confidence and control over your retirement decisions.

Avoid someone who is going to sell you a product rather than help you plan out your retirement in a methodical manner.

Going it alone may be the most costly mistake you make.

How are you to know what all your blindspots and challenges you might face in retirement are? You haven’t been retired before.

You’re not the first person to be challenged or even afraid of approaching retirement and you won’t be the last.

I’m not a product flogger. In fact when we meet with potential clients, we don’t even know if they need a financial product. I’m agnostic when it comes to products.

But there’s one thing I will not compromise on…Structure.

We have a framework for thinking through all your retirement options to help you make confident financial decisions.

All of that being said, making the shift from saving and seeing your super and assets grow to suddenly needing to draw the money down to spend can be a major adjustment which requires careful planning.

With the right structure, strategies and plan, you can enjoy your retirement with clarity and confidence.

If you’re ready to gain more clarity, confidence and control as your approach retirement.

Book your Retirement Clarity Call by clicking here. We’ll have a quick chat about what you’re struggling with and brainstorm how you can resolve your retirement worries.

Glenn Doherty – CFP – Financial Planner | Retirement Planning Specialist |Retirement Planning Made Simple for over 55’s within 7 years of retirement

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

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