Achieving a happy retirement

One of the best things about my work is seeing the change I can bring to the lives of clients. Typically, clients contact me when they need help planning the financial aspect of their lives for when they stop working.

They usually come into my office looking down caste and rejected, feeling that they haven’t done enough in their lives, that they haven’t saved enough and that somehow the future will be very bleak because of that.

Once we sit down though and go through the financial position, the reality is never that grim and you can see the physical change in people as I walk them through their options and explain that retirement can and should be the best years in their lives.

So, I thought it might be useful to walk through what I see as the five most pressing problems clients face when planning their retirement.

1.       Biggest fear is running out of money.

Research says this is the most pervasive fear of people as they enter retirement, but it is easily solved. It’s about setting up your retirement savings so they produce the most income as safely as possible and know how much income you are receiving.

This might vary from year to year, so it is important to keep track of it. The next step is simply to ensure you never spend more than the income being generated by your investments.

If you follow this simple rule, you will never inadvertently nibble away at your capital and you will never run out of money.

2.       First five years are the most expensive.

It’s also important to realise the first five years of retirement are usually the most expensive and that life tends to settle down after that and fall into a simple routine where your expenses are much the same month after month, year after year.

So, it can be a good thought to make sure you do all those one-offs you want to do such as update the kitchen or renew your car before you retire although for most people these sort expenses continue into the first few years.

3.       Pay out all your debts.

An important step is to ensure you pay out all your debts as you move into retirement. Debts are the same as a financial cancer, they just slowly erode your financial position and make it difficult for you to budget your finances, particularly during a period of rising interest rates.

So, whatever your financial position, this should be your first step in planning your retirement.

4.       Be flexible – markets have good and not so good years.

This really goes hand in hand with the first factor on this list to ensure that you never run out of money. Understand how much income your investments will earn you each year and this, depending on your investments, will vary from year to year.

So, as I often say to clients, there will be some years when the markets are strong, and your income is up and you should plan to take that extra holiday or renew your dishwasher.

However, there will be years when this is not the case and perhaps this is when you should think about holidaying within Australia or eating out one night less each week to reduce your expenditure in line with your income.

5.       Stay positive!

Finally stay positive. It is so easy in this day and age when we are literally bombarded with bad news about world events and investment markets to think it is all doom and gloom. History tells us things are rarely as bad as we think and that even the worst of times pass by.

Stay optimistic. Be thankful for what you have and make the most of every single day.