How should I plan for retirement?

If you are beginning your transition to retirement after building up your nest egg during your working life, it is vital to ensure that you have a plan for your retirement to ensure that your savings last. This article will outline some important considerations for investors to take into account when going through this transition.

‘Fail to plan, is a plan to fail,’ is a sentiment that rings true in relation to retirement. Those investors who do not invest ample time in establishing a plan prior to retiring may find themselves more vulnerable and less secure about their financial position. This could include the possibility of outliving your retirement savings due to unexpected costs or holding an inappropriate portfolio to meet your revised goals and objectives. Alternatively, there is the possibility that some individuals underestimate their living expenses in retirement and the funds they require for their desired lifestyle.

Therefore, it is important to have a foundational plan when moving towards retirement which is flexible enough to take into consideration unforeseen contingencies or life changes. Below are some tips to consider when establishing this plan.

  1. What are your retirement goals?

What these goals look like are going to vary greatly from person to person as everyone leads different lives and therefore has different costs of living. Your retirement goals should consider how much you expect you will need to maintain the lifestyle you wish to live, as well as a cash reserve to cover any unexpected expenses or emergencies such as medical costs. You may also wish to retain some additional cash savings for discretionary spending such as for travel and other leisure activities.

  1. Know the risks

These are a range of risks that all individuals transitioning to retirement need to consider. Below are some key risks which should be taken into account when devising your retirement plan:

  • Market risk and the level of risk you wish to bear when investing and the level of risk required to ensure you have sufficient funds throughout your retirement
  • Health risk and your personal health conditions and circumstances which need to be considered in the context of if, and when potential funds may be required in the future
  • Longevity risk includes the risk of outliving your savings which is likely to increase as medical care and living standards continue to rise
  • Tax and policy risk includes the potential changes to government legislation and eligibility requirements for relevant governmental support schemes

These risks should be considered, understood and planned for in the context of how they will impact your individual goals. Therefore, the weight of these considerations will be different across individuals depending on their respective health, life expectancy, lifestyle and overall financial position, but are nevertheless, important for everyone to consider.

  1. Assessing your financial position

Having a clear and accurate understanding of your financial position is crucial in order to plan for your future. Investors that do not have a true impression of their current overall financial circumstances may be more likely to over or underestimate the level of income required or costs associated with maintaining their lifestyle in retirement. Therefore, it may be advantageous for individuals to have a comprehensive understanding of their assets including superannuation, non-super investments, property, cash, annuities and the age pension if eligible. This will assist individuals to understand where additional funds can be sourced from if they are required and thus fortify your retirement plan. If you would like to know whether you are in the right super fund to help you reach your retirement goals and objectives, click here.

  1. Estate planning

Estate planning is another fundamental step towards establishing a steadfast retirement plan. Estate planning includes having an up to date Will, Enduring Power of Attorney and Guardianship as well as other legal instruments to help protect your assets. This may require you to engage with a lawyer or other professionals such as a financial advisor or accountant to assist you to devise an appropriate estate plan. This will not only put your mind at ease that you will have your financial interests looked after if you become incapacitated but will also help to ensure that your assets will be distributed according to your wishes when you are no longer around. If you would like to read more about the importance of an Enduring Power of Attorney, please click here.

Now that you have the key pieces of the puzzle it is important to piece them together and to formulate a plan for retirement which will help you to continue achieving your financial goals and objectives, long after you cease working. Establishing a plan prior to entering this stage, is also likely to give you greater financial freedom and certainty about your future and help you feel more confident during this transition.

If you would like further assistance to devise a retirement plan or to assess your investment suitable for retirement, please click the link to organise a complimentary 20-minute phone call with an EPG Wealth adviser. This information is purely factual in nature. Please do not rely on this information to make any financial decisions as this information has not been tailored to your personal. circumstances. If you would like financial product advice or services please let me know and I will set up an appointment for you. Any advice in this email is of a general nature only and has not been tailored to your personal objectives, financial situation and needs. Before acting on this advice, you should consider whether it is appropriate having regards to your personal objectives, financial situation and needs. Before making a decision to acquire a financial product, you should obtain and read a Product Disclosure Statement (PDS) relating to that product, it is important for you to consider these matters and to seek appropriate advice. The material contained in this email is based on information received in good faith from third party sources, and on our understanding of legislation and Government press releases at the date of publication, which are believed to be reliable and accurate. Past performance is not a reliable guide to future returns. Members of the IOOF group of companies (IOOF Group), associated employees or agents may have an interest in or receive monetary or other benefits from the financial products and services mentioned in this email. The Licensee is part of the IOOF Group, and we may recommend financial products issued by companies within the IOOF Group.



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