A Retirement Plan Is Not…
Have you thought about your retirement plan lately? Do you even have one in place? Is it in writing? For most, the answer is no.
For one thing, it can be daunting to think about. It’s that time you now have to start thinking about your next phase in life. What’s it going to look like? Will I be ok?
Unfortunately, we have to face the fact we’re getting older.
We’ve got to face head on any bad financial decisions that have been made in the past that may impact your future.
It’s complex and can seem overwhelming, too hard.
These are completely normal reactions as retirement is one of the most stressful events in people’s lives.
It’s as stressful as moving house and marriage.
However, we tend to put more time and effort into planning a holiday than we do with planning our retirement.
Go figure, a holiday is a short period of enjoyment yet retirement can last 30yrs or more.
If you’ve brought kids up, just think about the time it’s taken to bring them up. It’s a lot of time. This is likely the amount of time you are going to have in retirement to make the most of what you have.
So, let’s look at what retirement planning is not…
Fail to Plan, Plan to Fail
You’ve most probably heard of this time and time again, right?
In the majority of the survey’s that were completed on retiree’s, the number one regret that comes up is “they wished they had started their planning earlier”.
The other is there is a concern, and rightly so that most are worried about being able to afford everything they want in retirement.
Here’s the thing, there is a disconnect between what people are concerned about and their actions to address the issue. Most are doing little to address the issue.
We continue to stick our head in the sand to avoid the whole retirement planning thing altogether.
Here’s the thing, it’s coming whether you like it or not. Better to take some positive action now rather than regret missed opportunities later.
Continue down this path at your own risk…
What’s not Retirement Planning?
While many tend to think that their investment portfolio is their retirement plan, it is not.
While it forms part of what I call the tactics, it’s what funds your retirement lifestyle but is not a retirement plan by itself. Sure, it’s an important part but still not a retirement plan on its own.
The financial services industry is guilty of getting us to focus on the tactics, they are transactions.
Just think about it for a moment. What was the last advert you remember from the financial services industry?
I would think that it would have something to do with investing in something or promoting some type of super fund. Let me know if I am wrong here.
Following your Family’s Recommendations
While we draw on the wisdom and knowledge of our family to assist with financial decisions and rightly so, their family after all. If you can’t trust your family then who can you trust? Right?
Still not a retirement plan, unless they are going to fund your income in retirement. Not likely…
Here’s the thing, what if they are leading you up the garden path. Sure, they may be doing well but what works for them will not necessarily work you.
While they are family they may not know your intimate financial details.
Every retirement plan I’ve been involved with is very unique. While we may use similar tactics no two retirement plans are ever the same.
You are unique, therefore your retirement plan needs to reflect your uniqueness.
Besides, your family has not been where you are about to go.
Have they lived 30yrs plus in retirement?
Do they know how to protect your retirement lifestyle?
Do they have the skills to determine where things could go wrong and implement strategies to negate the possible pitfalls?
Retirement Planning today is very different than your parents, requiring you to be more dynamic in your approach.
She’ll be right Attitude
It’s interesting that we, as Australian’s still have this type of attitude, that it’ll work itself out eventually.
I have to say, I have never seen an athlete ever make it without a plan on how they are going to succeed. They don’t wake up with the gift of being a great athlete. It takes a lot of hard work and commitment and not to mention the meticulous planning involved.
That somehow on the day I retire there will be a magical amount of money in my account to fund my retirement lifestyle. I wish this was the case.
If this is the way you are thinking, keep going at your own risk…
I’m too busy
I get it. When I get home, I have two boys running around, and when I walk through that door my attention turns to them. They require my undivided attention.
Time is precious.
I’m sure you can relate to this.
And sometimes it’s the enormity of planning for 30yrs plus can be overwhelming. You have a long time to plan it out, so you focus on more perceived important activities, what’s right in front of you.
While sometimes it’s not knowing where to start, after all, they don’t teach this stuff in school or university.
Thinking you’re the expert
Let’s consider a brain surgeon here for a minute. They are a specialist in their field, that’s all they do.
So, if you need brain surgery, are you going to do this yourself?
Of course not, your going to go to an expert who has many years of experience in brain surgery and does this type of surgery day in day out, right?
You’re the expert in your own field of expertise, but not in the field of retirement planning.
Sure, you might be smart, you might know a little about shares or a lot, but from my experience, this is where this type of thinking gets you into trouble and will lead to big mistakes. The focus again is on the tactics, not the actual questions that need to be asked first.
Sure, some think they do it well, and there are, but there is still a lot that gets it wrong, they just won’t admit it…
It’s time to admit you don’t know everything and find someone who is an expert in retirement planning (aka Jigsaw Private Wealth for example or someone else who specialises in retirement planning) and work with them to define the possibilities, refine the plan, take out the individual emotional connection that can send you back many years with your plan.
I’m not saying you need to hand all the decision making over here. It’s about collaborating with someone that can help you nail your retirement plan, to ensure you don’t make the costly mistakes many have made before you.
It’s like having a guide to ensure you don’t go off track and if you do to help you get back on track.
Relying on Google
We all use Google to research these days.
I’m guilty of using Google for many things, but sometimes it doesn’t tell you everything you need to know.
Relying on Google for your retirement plan can lead to you blowing up your retirement.
Sure, Google has lots of information on retirement planning, how much you need to save for instance but’s it’s all general information.
Most of the time it leads to no action, you’re overwhelmed by the information. Who do you believe? And yes, even my stuff is out there, but it’s the good stuff:)
Once again you are unique and Google does not cater for your uniqueness.
Granted, it will assist you with making some decisions, but the problem lies with you siding with information that matches your thinking.
This could be fatal when using this to form your retirement plan, it’s what we call confirmation bias.
It’s when we are drawn to information that supports our thinking. What if it is all wrong?
Quite a common problem particularly when there’s an industry that’s built to take money out of your wallet. It’s what I term “Financial Pornography”…
We’ve talked about some of the things people consider to be retirement planning, but what do we really mean by a real retirement plan?
A retirement plan is something that is in writing. It states exactly what it is you want to achieve, ie. a certain lifestyle.
It allocates a cost to all the particular parts of your lifestyle.
It includes the tactics that you will use to achieve your retirement plus how you are going to protect against the certainty of an uncertain future.
A step by step plan of action, one small step at a time.
If it’s written down it is more likely you will achieve.
It’s doesn’t have to be a hundred-page document, you can do it quite easily on one page.
Now, I’m not saying that it has to be set in concrete. None of my client’s retirement plan is ever set in stone. We start with an educated guess on what they want and help them evolve and iterate their plan over time. After all, life changes and guarantee you are going to change your plans…
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Make it a great Life!
Challenging the Status Quo!
Glenn Doherty – CFP – Founder & Financial Organiser at Jigsaw Private Wealth
Email: [email protected]
Mob: 0401 253 729
Advice Disclaimer: Any reference in this publication to the provision of advice refers to advice of a generic nature, and should not be taken as product or investment recommendations. Before any action is taken based on the information provided, independent financial advice from a licensed financial adviser should be sought. Financial Freedom Project Pty Ltd ATF GA & DC Doherty Family Trust Trading as Jigsaw Private Wealth is a Corporate Authorised Representative of Exelsuper Advice Pty Ltd. The information contained in this publication is of a factual nature only and is not intended to constitute financial product advice. Information is current as at June 2018. This is an online information blog. It does not imply an offering of securities.