With significantly more attention and conversation around it than ever before, retirement is the “It” topic of the finance world. It’s an interesting and timely topic considering the changes in our social interactions and career aspirations, and many people that they want more control over the choices they have later in life.
Pre-pandemic, the ability to retire early was considered an elusive dream, a pipe dream for most people. However, changing norms including greater flexibility at work, flexi hours, job-sharing and hybrid working, provides a silver lining to the current uncertainties and offers an unprecedented road to flexible retirement strategies and better ways to prepare yourself for those eventualities.
Every individual has a dream about what retirement looks like to them personally. Whilst for some the very thought of an early retirement is greeted with shivers, for others it’s a dream that includes travel, golf, spending time with grandchildren, or walking the dog. Some may want to learn a new skill or language; others may enjoy pottering in the garden or climbing Mount Everest. It is as individual as the person who dreams about it, so its preparation also needs a personal approach.
Preparation is key
As Financial Planners, we encourage our clients to spend time with both mental and physical preparation: it can be difficult to envisage going to work one day and then just stopping the next. We encourage our clients to explore new hobbies and activities, and to think about how they want to spend their newfound freedom. Some clients find they need to make a “hard stop”. If they are well prepared for retirement they can turn their attention to the next chapter quite easily, discover new passions, see where else they may excel. It’s a journey of discovery, but one that yields many rewards for the initiated.
If you’re considering easing into retirement, don’t leave it too late. Your Financial Planner will help you to evaluate if you have the financial assets in place to support a reduced income. Many people underestimate the length of their transition to retirement and the real-world implications of working less hours and thereby the impact of a reduced income.
3 simple steps to get started
The pandemic has taught most of us to hit pause and evaluate what’s important to us. Whether you’re considering a jump or easing into retirement, there’s a lot to prepare for. Three of the key components include:
1. Evaluate your spending early - To effectively set a retirement goal, calculate today how much savings you currently have and how much you’ll need in retirement. A good start is to check your Super situation and your adviser can help you to plan from there. The earlier you start, the better off you will be.
2. Review your investment strategy considering the current climate and your timeline to retirement - In practical terms, this means checking if you need to increase Super contributions, manage unnecessary spending, increase savings, and evaluate if you qualify (or will qualify in the future) for any Government support. Think about if you need to quantify any significant changes in the future, e.g., downsizing the family home, transfer of a family business, or aged care considerations.
3. Do not delay seeking professional advice - In our experience, clients often delay seeking professional financial advice until they are faced with a significant change. Most financial advisers will offer an obligation free meeting. Invest your time, listen to the advice, and take care of your future. It will inevitably pay off.
This article was written by Peter Kenyon, Financial Adviser at Strategic Financial Solutions (SFS). Peter has been with the SFS team for almost a decade, and has fast become an integral and valued member of the team, tackling the many complexities of and Aged Care for several SFS clients. To get in touch with Peter, email him at Peter@sfsonline.com.au