Does the thought of retirement planning cause you (financial) anxiety?

Couple seeking Retirement Planning Advice with advisorRetirement planning, like any planning, will help you understand the pathway to your chosen destination. Planning is a process that helps to take the strain out of issues and events that might otherwise be challenging even traumatic. Good planning will take into account all manner of potential crises, windfalls and opportunities.

First thoughts of retirement can give rise to a level of anxiety about the financial capacity to fund a comfortable lifestyle in that stage of life. Whilst there are a number of factors to contemplate when considering retirement, one that is uncomfortable for most, is their longevity. Comfort can be taken knowing that adequate planning, careful allocation of financial resources and starting the process early enough, can restore your peace of mind.

Through realistic retirement planning, any level of anxiety should be reserved for pondering those activities on your bucket list that will keep you occupied in a post-employment world. Because of it, your financial position should be clear, understood and embraced, leaving you with peace of mind about your retirement and the level to which it can be funded.

What are the financial issues that could influence your retirement planning?

There should only be two situations where the financial planning for your retirement could be disrupted: and both are commonly encountered –

  1. earlier than expected retirement (because of redundancy, business failure, family ‘circumstance’ – or ill health); and
  2. a severe market downturn close to the end of the pre-retirement accumulation phase of your working life (known as ‘sequencing risk‘).

To be ready for an unexpected early retirement, financial planning1 and implementation of an appropriate wealth accumulation strategy can ease the concerns that can arise, particularly if asset protection strategies have been addressed in this process. Whilst the sequencing issue is less well able to be managed, a diversified investment strategy2 should ease some of the risk of loss at an inopportune time.

What financial resources are available for retirement planning?

As with most goals and objectives we set out to achieve, there are a number of resources available to fund retirement: these include –

Your planning may involve any one (or any mix of) these three categories (and the links in the above paragraph are to sources of information about features, benefits or tips in dealing with each of them).

Overcoming the impact of the above-mentioned disruptions to retirement planning..

Where retirement is brought on earlier than expected, family ‘circumstance’ is potentially going to have the most significant financial impact. Strategic planning to mitigate the effects of the other matters mentioned, include –

  • Redundancy should be covered by a financial entitlement that could contribute towards the funding of retirement brought on by that event;
  • Business failure – in the case of an ‘own business’ scenario – should, with adequate and appropriate asset protection strategies in place, leave some funds for retirement; and the
  • Ill health situation should be adequately provided for by an appropriate and strategically developed insurance portfolio.

The ‘sequencing risk’ scenario is one that confronted many ‘pending retirees’ at the onset of the 2008 Global Financial Crisis. (This is another twist to the protection of being ‘in the market (for a long time)’ as opposed to ‘timing the market’.) As indicated in the linked white paper from an Investors Mutual Limited (IML) portfolio manager, there are some investment strategies available that have been identified through recent events, that help to minimise the impact of this particular investment risk.

One increasingly common response to then effects of financial setback at or near retirement (such as the effects of ‘sequencing events’), is to work longer. Another response sometimes relied on, is to vary the lifestyle goals in retirement – for this to be a valid solution there needs to be sufficient recovery time allowing for age and income circumstances.

Replacing retirement planning anxiety with peace of mind..

There are a couple of times of the year when the ‘R’ word comes into stronger focus and people start contemplating their future retirement: one is towards the end of the financial year; the other, towards the end of the calendar year. The experienced advisers at Continuum Financial Planners Pty Ltd are available to meet with you, to review your needs, goals and objectives; and to recommend strategies for you to optimise your retirement opportunities:

‘we listen, we understand; and we have solutions’ which we deliver in personalised, professional wealth management advice.

You are invited to visit the About Continuum section of our website and then to Contact Us for an obligation-free appointment to discuss how we might be able to help you – or you can call our office (on 07-34213456) to make the appointment.

1 Continuum Financial Planners Pty Ltd has posted a number of articles on early retirement: to find some that may be of interest to you, search the phrase ‘early retirement‘ at this link.
2 The Continuum Financial Planners Pty Ltd website Library article about investment ‘Risk and Reward‘ provides some helpful tips in this regard.

[This post was originally published in late 2012; it has been considerably rewritten and re-posted in January 2015; and again in May 2016]