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Advice Triggers! – Part 1 – Retirement

There are certain trigger points in everyone’s life where financial planning is particularly useful. I will be exploring each of these in turn. The first trigger point I will be looking at is retirement.

What is retirement?

Retirement means different things to different people. Most people would define retirement as leaving your job and stopping work. However, this is a very restricted and simple definition. My definition is that retirement is about changing from spending your time doing what you have to do to pay for your lifestyle, to having the financial freedom to doing what you want to do with your life.Retirement is one of the most obvious times for people to seek advice. In fact, lots of pension companies try to guide you to do so.

Where’s the value in financial planning during this transition period?

There are three main areas of value in seeking advice for the life transition of retirement.The first of these is helping you to figure out what you actually want your retirement to look like. This sounds really obvious, but I rarely come across people who know what they want to do with their later life. They may have a vague idea of when they want to retire, but often they haven’t had the space, time and focus to really think about what they want from their retirement.

The key value in this stage is knowing where you want to get to. It’s all too easy to drift through life without a clear objective. By getting a clear vision about your retirement, the chances of reaching it and living the life you want are greatly increased!

The second main area of value is the planning and modelling. This is where we model how we can use the resources available to you now, and in the future, to fulfil your retirement goals. This allows us to stress test different scenarios and really work out how achievable your goals are.

The planning stage gives us the clarity on knowing whether you need to make adjustments (i.e. spend less,  save more, retire later, etc.) or perhaps whether you can dream bigger! Importantly, it gives us the framework to make informed decisions.

The third area of value is the technical side of advice. This is the actual nuts and bolts of how to fund your retirement, how to take your retirement income, measures on minimising the impact of tax, building a sustainable investment strategy and selecting financial products.

When should financial planning start for this transition?

This is a slightly tricky question. The obvious answer is as early as possible. However, if it is started too early there is little to be gained within the technical side. Personally, I prefer to start this process 5 to 10 years prior to my clients planned retirement date. This ensures that there are (generally) enough resources to add value within the technical advice, whilst giving enough time to allow the vision and planning side to deliver the retirement you want.

Hopefully this is of use to you. If you know someone who you think would benefit from a chat about the retirement life transition, please do get in touch.