It’s simpler when you are working. Money is coming in and though you have the usual financial juggles, there is also the reassurance of the next paycheck.
Not when you retire. And no matter how much you prepare there is always an emotional thud when no longer working becomes real.
It’s also a time when people’s money anxieties can dial up to 11.
The most important thing is to be aware and prepared.
1. The retirement risk zone
The final few years of your working life and the first years of retirement are crucial. You no longer have the luxury of time to ride out any market volatility. A 20% drop in the value of your super is permanent. You also have to adjust your lifestyle spending.
2. People are living longer
You must plan for a retirement of 20 to 30 years. There is a risk, if you are not prepared, of running out of money. There should always be the Aged Pension, but many people struggle to adjust their lifestyle to that.
3. Inflation eats the value of your money
It’s rampant at the moment, but this will soon pass. However, even at the long-term average of 2.5%, it is insidious. At that rate, $1.00 today is only worth 50c in twenty-five years, which is shorter than most people’s retirement life.
4. Asset volatility
As 2023 is clearly showing us, share markets, property and even bonds can fluctuate in value. The closer you get to retirement you will need to be more cautious.
It is impossible to predict investment returns but sound financial advice mitigates the risk.
As Confucius once said:
"The best time to plant a tree was 20 years ago. The second best time is now."
Get started on your plans today.
And if you would like any guidance, start by booking a complimentary Personal Financial Health Check with Dene Kilpatrick. To create a path forward, and peace of mind.