Retirement financial planning has become increasingly challenging as the value of investments fluctuate wildly. Compounded by world economies becoming more and more unstable and life expectancies continue to increase.
As a result only 5%, or 1 in 20, of all retired people will have enough money to live their pre-retirement lifestyle?
So unless you are one of this small minority your financial planning for retirement is a very important part of your overall retirement planning.
It is not about your financial planner!
Too many people incorrectly believe that your financial or investment advisor, is the ideal person to create your retirement plan. Unfortunately I've learned through experience that this isn't always true.
They may produce a very fancy looking, personalised financial retirement planning document … but there's a lot more to retirement financial planning than a rosy set of financial predictions filled with questionable assumptions!
Steven Austad, of the University Of Texas Health Science Center, told BBC World Service's Discovery programme that the life span for a human being may be much longer than most people have considered possible.
He said that he was virtually certain that some children alive now would live to the year 2150 .... to age 150!
Just imagine having to plan for a 90 year retirement?
Retirement financial planning - my experience!
Some of my past experiences with retirement financial planning “experts” have had some pretty dismal consequences.
- An investment that over a period of 5 reasonable years grew a lot less than inflation;
- A cash investment of $700 000 which shrunk by 35% in 15 months.
In both cases the financial advisers did everything they could to convince me that this was through no fault of theirs! The performance of the funds they invested in was acceptable based on the comparative index.
So, as long as they were doing better than the chosen index then they were doing okay?
Meanwhile my loss was real money ... not an index!
Living longer, means more living expenses and more health care costs. It may also include long term frail care or assisted living - costs that can quickly gobble up any accumulated assets.
My mission is to make everyone realise that they have to take an active role in their own retirement financial planning
You are responsible for your plan
So firstly you must have a retirement plan.
Then you should review all of your circumstances and progress against your retirement plan targets at least annually.
Don't micro manage the plan. This isn't a day to day or even month to month review and should probably not be done more often than twice a year. In this review vigorously check whether there have been any significant changes in your assumptions and risks. If there are then make adjustments to the plan.
I am also constantly looking to find organisations and specialists in this marketwho provide honest, reliable and value for money retirement financial planning services for individuals.
Have a Plan B
If you have any doubts about your retirement finances start working on your "plan B" as early as possible. These could include;
- Postponing your retirement
- Finding an additional source of income
- Looking for an opportune time to sell your property and downsize
- Reducing living expenses
- Investigating the option of moving to one of the many attractive cheap retirement places around the world.
Reduce your plan to writing. The moment you complete this, you will have definitely given concrete form to the intangible desire
~ Napoleon Hill
Simple Retirement Calculator: The Power is in Compounding.
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How Much to Retire: A Simple Rule of Thumb.
Investing for Retirement: Are You Losing a Lot in Costs?
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