“The measure of success is happiness and peace of mind” – Bobby Davro
How do you achieve peace of mind in retirement?
Interestingly this question has not ever been asked by a potential new client. Typical questions we hear always start with a problem:
“Have I got enough?”
“Can I afford to retire now?”
“Are my investments right?”
“Should I put more money into my pension?”
“Am I going to run out of money?”
“Should I buy an annuity or use drawdown?
“Can I afford to help our children?”
“Should I transfer my Final Salary pension?”
“What does all of this pension paperwork actually mean?”
“How can I save tax?”
There are many more. However, retirement planning specifically normally starts with pension-related questions that are the trigger for someone making contact.
After an initial conversation, we do normally reach a point where the actual questions become, “Where do I start?” and “What do I need to do next?”.
The next step should NOT be, “so, how much do you have?”. It’s definitely NOT about pensions, investment funds, asset allocation, risk profiling, SIPPs, value propositions, charges, active vs passive or even tax…
It must start with YOU… your life… your values… taking the time to establish what is most important to you and your family.
This might seem obvious, but so often we meet potential new clients who have existing pensions and investments which they do not understand. They are unclear as to why they are invested in such a way, what they actually have, and what their investments are for.
They have not ever been asked any questions about their hopes, fears, dreams, and aspirations.
The reason this is so important is that, as human beings, we need to make decisions based on our values and where we are trying to get to. Decisions should not be based on what has just happened, or what an expert, economist, fund manager, newsreader or friend down the pub has just said.
Rational decisions need a solid foundation.
Say that you have an investment portfolio which needs to provide you with an income for a 30-year retirement.
If a stock market correction happens (which it will) and your investment portfolio falls in value by say 10%, 20% or even 30%… how can you hope to make any kind of rational decision if this investment portfolio and the plan that must support it hadn’t been carefully designed to reflect the values and goals of your family?
Your goals and objectives, and what is most important to you, must provide the foundation to a successful retirement. Nothing else matters in the eye of a storm.
5 steps to create peace of mind in retirement
These five steps are vital when you are planning to rely on your investments to support a multi-decade retirement life.
Make sure you know (and your adviser knows) what is most important to you.
Have a plan. Create a lifetime financial forecast based on what’s important to you, and the lifestyle you and your family want. Stress test this plan based on actual historical information and your own fears, worries and concerns.
Take the time to really understand your expenditure and establish the cost of the lifestyle you and your family want.
Invest your hard-earned and diligently-saved money based on a set of beliefs all focused on supporting point 1. This will stop you and your long-term plans getting blown off course.
Review your plans at least annually. You will always need to adjust along the way as life is guaranteed to throw you some curve balls.
Optional 6th step – Find a trusted adviser for your retirement life, but only if they can provide that most important intangible: peace of mind. This is priceless.
A retirement without worry is an extraordinary retirement. Stopping work after 30 or 40 years is one of the biggest life transitions and challenges you will ever go through, so if you can remove some of the worries about money, that’s a huge benefit.
It will mean you can spend your time enjoying all those things that are most important to you and your family, as time is our most precious commodity.
LIFE > PLAN > INVEST – This is the only meaningful way to create true peace of mind in retirement.
Ask yourself this one question… Why is money important to me? It is a wonderful starting point.
If you want to find out how REAL financial planning adds serious value, please get in touch. Email firstname.lastname@example.org or call us on 01621 851563.