Confidence in Retirement
Most of us worry about running out of money in retirement. Especially during uncertain economic times like these, when we start to wish we had started planning for retirement earlier.
And most of us feel some level of guilt about our finances.
The trouble is this guilt can lead us to avoid engaging with our money. We avoid it because we’re worried that we’ll be told that we’ve blown it. That it’s too late for us. That we’re behind where we should be and that we won’t catch up.
It’s like the old adage that the best time to plant a tree is twenty years ago. It may be true, but it’s certainly not helpful.
Now is a great time to plant a tree
When it comes to our money, no matter where we find ourselves, we always have options and opportunities.
Over the course of our careers, we have helped thousands of local people plan for their retirement. In our experience having an extra $50,000 or $100,000 in retirement doesn’t make any real difference to retirement satisfaction.
What we have seen is that people who retire with $450,000 in super can be just as satisfied with their retirement as people who retire with $650,000.
Wisdom from Mike Tyson
Flexibility is more important than planning. Mike Tyson said it best when asked about Evander Holyfield’s fight plan, “Everyone has a plan until they get punched in the mouth”.
Recent research by CoreData shows that most of us retire unexpectedly in spite of our plans.
The most common reasons for unexpected retirement are: forced unemployment; our own ill-health; and our need to care for a loved one.
Control what you can control
Even if we can’t control the timing of our retirement or how much we have in retirement savings, there are still things you can do to make the money last.
We can control how much we draw and, to some extent, our returns. Most of us can differentiate between our needs and wants. And we’re more than happy to tighten our belts when required.
When it comes to our investment returns, we might not be able to control the direction of the share market each week, but we can control most things. We can control how much we invest in shares, when we invest and when we sell.
A framework for confidence in retirement
Feeling in control of how much you spend and how you invest is the key to feeling confident in retirement. At Daniel Crump Financial Planning we apply a mechanism called ‘asset liability matching’. When things go wrong, as they inevitably do in life, you’ll have a framework for getting back on track.
We start by looking at how much you want to spend and when, and make sure there’s money available.
We provide for your expenditure for the next few years and then invest the rest of your money to access growth. If you engage with us to review your portfolio we judiciously rebalance from time to time to lock in profits and make sure that you replenish your short-term funds.
However, if markets are tough you can sit tight and ride it out, knowing that your short-term needs are being comfortably met.
If you’d like to learn more about how to feel more confident about your retirement, give us a call. We’d love to help.
Daniel Crump is the founder of Daniel Crump Financial Planning. This article is general and does not consider your personal circumstances. If you would like advice specific to you, give us a call.
