Financial Planning during your Golden Years

Many people consider the day they retire to be the finish line, the point after which financial planning and investing should be a thing of the past. Nothing could be further from the truth.

There is a great deal written about planning and investing to accumulate enough wealth so that you are able to retire, and while not detracting from the importance of such advice, it is equally important, if not more so, to manage your finances and set investment goals during retirement. Given that people are living longer, you may find yourself living just as long in retirement as you did during your working life.  So, if you spent 30 years planning and strategizing your retirement savings, why wouldn’t you be equally meticulous with your finances during your 30 years of retirement? In fact, it may be argued, that investing during retirement requires an even greater level of care as there is little room for error and little time to make up for mistakes.

Longer life expectancy means that there are plenty of financial decisions to be made in your sixties and seventies.

The cornerstone to long term financial success is to have an honest conversation with a professional financial adviser. Apart from the nuts and bolts of adding up your assets, quality financial planning and advice should incorporate holistic lifestyle aspects as well.  Remember this is your life and your plan and needs to be personalised.  So, if you want a lock up and go and lots of travel that is what your plan should cater to. If you want a bigger garden to spend time at home with your grandchildren, that is what you plan for.

Draw up a budget, have a financial plan and review the plan regularly against actual investment performance to make sure your finances stay on track.

The performance of your investments is likely to fluctuate with market cycles. One of the challenges of investing after retirement is that the income you may ideally want is usually quite constant. However, stock market returns are notoriously lumpy, and even interest rate cycles can have an enormous influence on retirement incomes. Managing these factors is critical to a long and comfortable retirement.

Even though you may be retired, a 30-year investment horizon means that you are a long term investor

Many people think that since they are now retired, they must take a very conservative approach to investing, believing that cash is king. The problem is that inflation could eat away at your retirement portfolio over the years. We know that the asset classes that make up your investments will drive your portfolio returns in the long run and that you (and your spouse) may have a 30-year retirement to look forward to.  You will therefore need an asset allocation that matches your expected returns and investment horizon, incorporating risk assets such as local and international equities.

It is a misconception that during retirement all your investments must be low risk with a propensity to cash

Retiring, living well, and being financially comfortable are not conflicting goals, so long as you maintain a strong sense of the realities of financial planning during retirement. It should never be about retiring and hoping you’ll have enough money, but rather planning and effectively using the financial resources you have to make the best choices along the way.