I’ve just got out of a forward planning meeting with a long term client.
There was one overwhelming question on their mind….
I knew they were on edge with the questions they were asking.
But deep down, they wanted to know if they’d still be okay? In other words, will our money still last the distance?
Retirement Roadmap Implemented…
Andrew and Jo had been long term clients of mine for many years. We’d been working with them to set themselves up for a comfortable retirement.
Jo had left the workforce many years ago with Andrew working in a high level role. The business he worked for had been moving their operations out of Australia.
This meant that Andrew’s role was ending. We’d spent many years working on his exit plan.
While Andrew and Jo had accumulated a reasonable sum of financial assets to fund their retirement. There was not a lot of wriggle room.
Andrew still believed he had plenty to give. The plan was to set up his consultancy and work for at least a further 5 yrs.
Based on his retirement roadmap we had been working on, they’d be comfortable. Afford all the overseas trips they had on their bucket list. While spoiling their grandchildren.
It was a very simple retirement lifestyle for them.
Everything was looking good until…
Covid changed the course of their retirement…
With plans for Andrew to start his consultancy. Covid shut down the world and Andrew’s hope of making his consultancy work also went with it. Work dried up.
It was a tough time for many when Covid hit.
It was a tough time for them, Andrew itching to get back in the workforce, saw his dreams slip from beneath him.
Lucky for them, they had socked a reasonable sum away in their super. But without work, they were drawing quicker than they had expected.
They had to reconsider their options…
Share markets took a dive and shook their confidence…
Share markets took a dive.
Along with withdrawals from their income streams over the last two years, on paper, their assets were down a reasonable amount.
Andrew and Jo had every right to be concerned…
Over the last 5 yrs they had only experienced positive returns from their super accounts. Covid the outlier.
They’d experienced a fall right at retirement. They were experiencing one of retirement’s BIGGEST risks.
Sequencing risk (one of 21 retirement risks), timing of investment returns. Many are not prepared for this and for that matter, are unaware it exists.
Murphy’s law reared it’s ugly head and there’s a high chance that when you plan to retire. You may experience a similar event. You need to prepare in advance for this.
The big question on their mind, “Are we still going to be okay?”.
Prior to their meeting we’d updated their long term cash flow projections. To see how they were positioned taking into account recent share market falls.
The outlook was not as bad as they had thought…
We were able to show them that no matter what just happened. No income from employment and share markets taking a dive. They still had enough money to see them through.
They even had a safety buffer (what we call their “War Chest”) in their portfolio to cope with these types of situations, more specifically to manage sequencing risk.
Not only that, we could now implement a number of strategies, given there was an age gap between Andrew and Jo. That would allow them to access some benefits to lessen the impact of their current drawdowns.
Retirement roadmap reworked…
While we were able to show Andrew and Jo that they were going to be okay. They had a number of changes in their circumstances that would have an impact on their finances.
Andrew had to give up his dreams of running his own consultancy, however, he’d managed to secure some work he loved.
It was not going to pay him the amount he would have received running his own consultancy, but helped him get back in the workforce and contribute for a while longer.
The expectation is he’d do this at least for the next 5 yrs and see where it goes from there. It was part-time which would also allow them to tick off their bucket list holidays.
Jo had also received a financial gift from her parents, not enough to set the world on fire, but enough to make a longer term difference for them.
With the work Andrew had picked up and the financial windfall from Jo’s parents, the outlook was looking that little bit brighter.
Andrew and Jo now felt better than when they came in…
Andrew made the comment at the end of the meeting, “I always enjoy these open conversations with you”.
We are now in the process of making the course corrections to their retirement roadmap.
Your retirement plan requires constant course corrections…
Most people think that once they have a retirement plan…that’s it…nothing more to do.
Adopt this approach at your own peril.
Your plan is never going to go in a straight line. There’s going to be highs…there’s going to be lows.
For most people what they plan for retirement is going to be different to what they thought.
There will be many challenges to manage as your life unfolds.
Some you will have control over…others you will not.
How you react will determine your success or failure.
Your retirement plan must be agile enough to flex and move as your life changes and share markets change.
The problem is, you don’t know what the future’s going to hold.
You need to keep one eye on the now, look out on the horizon and be prepared for the unknown.
More importantly, you need to have a process or a framework to continuously make decisions in an organised way.
This is how you achieve a confident and comfortable retirement…
Do you have a framework for making sound decisions when your retirement journey takes a wrong turn?
Make the next smart step and contact us for your complimentary Retirement Clarity Call below to start managing your retirement plan the right way, today.
Glenn Doherty – CFP – Financial Planner | Helping people within 10 years of retirement achieve a successful retirement