6 steps to a great retirement - Newcastle Financial Planning Group
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6 Steps To A Great Retirement

6 steps to a great retirement

Author: Daniel Brown

We all have goals and dreams of what the ideal retirement will look and feel like. However, many people fail to take the time to prepare.

Eleanor Roosevelt
“It takes as much energy to wish as it does to plan” Eleanor Roosevelt

We have encountered many situations over the years where clients have failed to adequately prepare. It’s great to have a clearly defined plan, but it must be followed up with Financial Advice and an action plan.

Here we take a simple look at what you should consider before you retire.

1. Health – you can’t do much without it

Acknowledging that your health impacts the likelihood of achieving all of your retirement goals is the reality that most will likely consider but do little about.

Ensuring that you have pain-free mobility allows flexibility with your travel plans, enabling you to make the most of your retirement in the early years and complete all of your bucket list items.

Think about your mobility like your working career; you have a process to follow each day and achieve your goals along the way.

Activities such as yoga, gym, walking, swimming or riding a bike are great for your health, both physical and mental as you will likely meet like-minded retirees.

Hayley Stathis of The Well Clinic states “All too often, people reach retirement with grand plans only to find themselves facing poor health. Some of the most serious diseases in our modern society, such as heart disease, diabetes and other metabolic syndromes can be avoided and even healed with a focus on a healthy diet and lifestyle. With good health, retirement can truly be your golden years. As the saying goes, the only true wealth is health!”

2. How much do you really need to retire?

When we meet with clients and start the retirement planning process, we ask you to have consideration for your spending habits and plan the initial retirement years with consideration of the potential lifestyle restrictions after 10, 20 or 30 years of being retired.

Why is this important? Often clients believe they need to accumulate excessive amounts of capital to support their ongoing income needs.

The reality is far different. A process you can follow is consider asking your parents how their spending and funding in retirement has transpired. It’s likely the majority of spending took place in the early years and now they are accumulating more than they are spending.

Outcome – consider the likelihood of your goals and spending habits in retirement and it’s likely you will need far less capital then estimated. This might allow you to set goals that are more exuberant or potentially allow you to retire earlier.

3. What strategies should you consider – who’s on your team?

Like all great plans, you need a team of trusted coaches or resources to support you.

  • Who will hold you accountable for your spending? Are you spending enough?
  • Do you have a Solicitor to help with your Estate Planning?
  • Are you claiming all your franked dividend benefits?
  • Are you continuing to update Centrelink with your current financial position?
  • Are your cash reserves sufficient to meet your goals and ongoing income needs?
  • Is your financial planner (spending coach) regularly reviewing your asset allocation and investment options with portfolio?

Having experts in your team to guide you through to retirement is essential to having peace of mind and taking full advantage of your retirement lifestyle.

4. Bank Account – how much do you need?

One of the most important processes for your retirement planning is to ensure you have the discussion with your partner of “how much do we need for a rainy day?”

My experience – many clients go into scarcity (not enough) mode or hanging onto everything they have, rather than enjoy what you have worked so hard for.

It is a mindset shift – from accumulating throughout your working career and being told to save, save, save to then giving yourself permission to spend it.

Establishing a rainy-day fund or Plan B that both partners agree on ensures you have agreement and supports the daily spending habits.

The Plan B fund also supports discussing all the potential “events” and understanding that most can be easily met.

5. Investment Options – Understand the Asset Classes

Consideration should be given to what investment options suit your experience, knowledge and financial position when you discuss your strategy with your Financial Planner.

3 key topics to discuss with your partner:

Knowledge: understand the investment options available and what creates both negative and positive investment returns across the asset classes. Do both partners consider capital preservation a priority?

Inclination: when investment losses are made, are you prepared to ride out the volatility or liquidate in times of uncertainty? I refer to this process as “sleep factor”- knowing how much volatility you can handle and therefore, how do we construct your portfolio to reflect your honest decision-making process.

Time: have you got time on your side? After considering your knowledge and inclination to sell in times of volatility, time in the market is important and timing the sales and purchases within your portfolio will have an impact on your overall investment return.

Knowing our clients, rather than just completing a questionnaire, is the key difference in our business. Each of our Financial Advisers take a 100% accountability with ensuring our clients have the best possible retirement.

Investment markets will be volatile and having and making educated decisions rather than emotional reactions will serve you best.

6. What are your goals for your legacy?

What do you want to leave for your family?

Have a conversation with your partner & get it documented. Speak with your team of professionals – Financial Planners and Solicitors should work together to document your requirements.

Consideration should be given for both partners to document Wills, Powers of Attorney, Guardianships, Beneficiary nominations and the potential use of Testamentary Trusts. This process ensures both partners are aligned, and thought given to how your wealth will pass through to the next generation, i.e. Intergenerational Advice.

In the event where you need to take divorces, de facto relationships and disability into account, advice should be sought from an Estate Planning specialist.

Often, we find starting this conversation sooner rather than later has significant benefits for all involved, including consideration to who is going to support the Aged Care process and lifestyle impacts on everyone involved.

Two bonus tips to improve the amount of your legacy:

1. Superannuation Tax: One of the strategies we often consider for our clients is the Superannuation taxation components. Generally, you will have a component which is tax-free and the other will be a taxable component.

In the event your Superannuation or Pension account balance passes to a non-financial dependant, a 17% rate is applied. We have a few different strategy options available to reduce the impact on the Estate which we can discuss as part of our process.

2. Capital Gains Tax (CGT): Complete a review the CGT position of your investments and consider selling some of your investments in different financial years. This might provide the opportunity to liquidate or simply your portfolio, while also reducing the impact of the taxation applicable to your portfolio if liquidated all at once.

Take your first step towards a great retirement and book an Initial Financial Planning Meeting with one of our NFPG Retirement Specialists.

DJIB Investments Pty Ltd T/A Newcastle Financial Planning Group is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429. This editorial does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information, please contact our office to opt out. The views expressed in this publication are solely those of the author; they are not reflective or indicative of Licensee’s position and are not to be attributed to the Licensee. They cannot be reproduced in any form without the express written consent of the author.

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