American pastor Harry Emerson Fosdick once said: “Don’t simply retire from something; have something to retire to.” If this is to be the case, it is imperative to plan ahead and consider all the financial, practical and emotional aspects of retirement planning, says Manjula Naidoo, Advisory Partner at The Wealth Corporation.
When we seek to come to grips with our finances, many of us begin by undertaking a simple budgeting exercise. We look at income and expenditure, decide on an appropriate plan and timeframe to handle debt, and work out how much we are then able to save.
Rather start at the end
While this is a good exercise, it is best practise to start with the end goal in mind. Saving should not be what you do with the money (if any) that you have left over at the end of the month. The amount you choose to save should be directly correlated with the retirement and life goals you have set for yourself and for your family.
By starting with the end in mind, you are better able to eliminate the kind of wasteful expenditure that satisfies your desires now while sacrificing your needs later on in life. ‘Keeping up with the Joneses’ can seem of great importance when we are young, but as we get older and the reality of retirement begins to sink in then the foolhardiness of youth can prove to be a bitter pill to swallow.
If you have set appropriate financial goals for yourself, you will be better able to withstand the temptation to buy into that holiday timeshare programme with your friends, or purchase that too-expensive car just so you and your neighbour can have a matching set. You will resist these impulse or ‘ego’ buys because you have already decided that realising your future goals is more important.
That being said, we all have different desires, needs and priorities. What one person regards as wasteful expenditure can be of great importance to another. For this reason there is no one-size-fits-all solution to financial planning. To get an idea of how you want your retirement to work for you, try asking yourself the following questions:
· Do you want to travel abroad regularly with your spouse once you are retired?
· Would you like to purchase a holiday home locally that you can enjoy with your children and grandchildren one day?
· Is providing for your extended family important to you? If so, should you be looking at establishing a trust for your dependents?
Consult your spouse
Importantly, couples need to decide together on their family’s needs and goals in both the short and long term. Together they need to agree on and take ownership of their financial plan if, ultimately, it is to work for them both.
All too often one spouse will take care of the finances while the other focuses on work or family. Eventually, when you are forced to live with the consequences of all the small financial decisions you made earlier on in life, this can lead to regret.
American poet Richard Armour spoke of retirement as being “twice tired… First tired of working, then tired of not”. To really make the most out of your retirement and be able to welcome that tomorrow, you need to honestly answer the following questions:
· What will I do?
· Who will I do it with?
· How will I fund it?
Ask yourself today: Have you got something to retire to tomorrow?
About The Wealth Corporation
The Wealth Corporation was founded in 2001. Since then, they have experienced considerable growth and gone through many changes, including the establishment of a national footprint and their partnership with Citadel in 2012. They have a proud history as being thought leaders in the industry, developing best practice in client service and advice processes and leading by example. Their advisory solution offers a complete view of the retirement planning and management process, looking at all aspects of financial and personal well-being. This process is called Integrated Insight.