Are you planning on retiring soon? The chances are you’re as worried about the current market turmoil as you’ve ever been. Personally, I’m in the middle of my working life, but over the last 18 years I’ve helped loads of clients move from relying on a steady employment income to relying on income from a personal accumulation of investments and assets. I’ve seen first-hand that, no matter how much money a person/family has, there is almost always an inherent anxiety that there won’t be enough money to retire comfortably and a natural aversion to having to ask children for help. This is all normal but, understandably, makes for a stressful transition from working to retirement. Now you have to contend with financial markets that have fallen off a cliff and an even-worse economic outlook than we had before.
Hopefully, you’ve been saving for the last 35-40 years, and on average, your investments have delivered a healthy return above inflation. Unfortunately this doesn’t take away the reality that your investments may be worth 10% less than they were at the beginning of the year, that we’re in a period of pitiful JSE returns, and that we’re likely heading into a couple of months of uncertainty as we figure out the short- and long-term impact of COVID-19.
Do you have enough money to retire?
The first question you should ask yourself is whether you have enough money to retire. If the answer here is definitely no, then it’s no good shrugging and hoping for the best; you may be ok for the first decade but you’ll find yourself in a horrid situation at a point in your life when there’s little you can do to rectify the situation. You essentially have two choices:
If you are unsure of the long-term suitability of your savings, then the above applies to you too.
While I truly believe that seeking professional help can add significant value, and cost savings (yes, savings) to your life, you must do some self-education, even if you already have an adviser. This will help you to ask the right questions and know broadly what your alternatives look like.
Focus on what you can control
One thing I’d definitely caution against is making any short-term, knee-jerk decisions that will affect you for the next 30-40. Your retirement plan could well need to cover the same number of years that you worked for, and thus needs to be approached with a sensible long-term approach; a lot can happen over 30 years! Importantly, I think the best thing is to focus on what you can control and make sure you have a detailed, yet flexible investment strategy in place. Here are some plan foundations:
Trying to summarise the above, it’s going to be important to lift your head above the noise and focus on your high level strategy. Once this is in place, adapt it for the environment. Take your time making sure your decisions are well-informed as you cannot undo your choices in a decade’s time. And lastly, get professional advice - a good adviser will have the experience, knowledge and resources to steer you through this turbulent time.
For peace of mind in retirement, partner with an NFB Private Wealth Manager on your retirement planning journey. Find your Financial Adviser here.