Most people come in to see us about 10 years from retirement and are usually very surprised on what can be achieved if they decide to switch on and focus.
Picture your retirement. You might see yourself spending time with the grandkids. Perhaps picking up a neglected hobby.
You might even plan to pack up your worldly possessions and hit the road for greener pastures.
We spend a lot of time thinking about what can impact someone’s retirement.
Most people are focused on the risks associated with the market crashing, or Brexit, or Trump getting elected… or any other number of factors well outside of their control.
In reality the biggest risks lie in whether you have a plan, and whether you stick to it.
These are some of the main dangers that can stop you having the retirement you want.
What is a financial planner? It’s the most common question I’m asked. If you ask Wikipedia, a financial planner is ‘a professional who prepares financial plans for people’, which is akin to saying a concreter is a ‘professional who prepares concrete for people’. Not particularly informative.
I like to conceptualize! Every time one of my clients retires, I like to picture the accumulated retirement savings of that couple waking up to an early morning alarm, getting dressed, and going to work on behalf of them. When you think about it, that’s precisely what happens. For the entirety of one’s working life, their living costs are met from their physical exertion, in getting up and going to work. In fact, retirement savings are boosted by the worker’s act of waking up and going to work, in the form of employer superannuation contributions and the worker’s salary sacrifice contributions. All of that abruptly changes when the worker retires. Not only do contributions cease (no more employer super or salary sacrifice going in), but money starts to come out to meet the living costs of the newly retired.
I hate to be the bearer of bad news, but if you’re reading this article, on the website of a financial planning business that specialises in working with 55 year olds, I can probably assume something about you: You’re not 25 anymore.
Practical examples of how a good financial adviser can help everyday people to retire in financial comfort.
John had woken that morning to find that it was finally here… the day had come… he had turned 55. It suddenly dawned on John, a sales rep, that he had exactly 10 years to ‘make hay’ before his planned retirement at age 65. Paid on a monthly basis, this equated to only 120 remaining pay cheques for the rest of his working life before he was on his own. John’s wife Judy, a nurse, was 2 years his junior but planned to retire at the same time as John in 10 years.
It’s a significant birthday but also culminates in a time where your earnings capacity is usually at it’s highest and your expenses are reducing in that your children have flown the coup (or are not far from doing so) and your mortgage is paid out or under control. Getting your ducks in a row from age 50 also gives you more time (eg. 15 years if retiring at age 65) when compared to leaving it later.
Turning 55 isn’t all bad. During our 50′s our earning capacity is often greater as experience has paid off with that long deserved promotion. Expenses generally decrease as well as children finish school and the mortgage reduces or is even paid off. The typical budget of someone in their 50′s is therefore often very different from someone in their 30′s or 40′s.
It’s that time of the year again, when we send off our tax information and pray to the accounting gods that we end up with some sort of a refund. It can sometimes seem as though the ATO picks a number out of the air when determining what sort of refund/payment we are eligible for, however it’s really a fairly simple equation:
Gross Income – Allowable Deductions = Taxable Income.
Dallas Davison, Michael Hogue and Ali Hogue.