Retirement Planning – Why Early Planning Is Important And Seven Reasons Why People Put It Off.

Financial Planning

A common reaction from clients when I present their financial plan to them is, “I wish we’d done this sooner”.

When it comes to retirement planning many clients leave it too late and often approach a financial planner shortly before or after they have retired.

The best time to start planning for retirement is several years before and one of the first things to do is to obtain a clear understanding of your current financial position. This will enable you to understand what your current lifestyle looks like in terms of your income and expenditure, your assets and liabilities and what capital expenditure you may have on the horizon.

We can then discuss what your future lifestyle might look like and then we can design a financial strategy for how to get there. You might be pleasantly surprised to find out that you are able to achieve financial independence earlier than you thought – don’t forget that financial independence does not necessarily mean giving up work, it means that you have sufficient wealth that you work because you want to, for example because you enjoy it and it gives you purpose rather than because you have to.

Conversely, you might find that you may have to save more or delay giving up work for a year or two. Knowing this several years before retirement means that you have time to plan ahead.

The key point to remember is that your financial plan has to be re-visited regularly as you approach retirement so that any changes can be made – your circumstances may change, assumptions may need to be altered or new goals and objectives planned for.

Planning For Retirement Early

Having had hundreds of conversations with people either approaching or in retirement, a common theme is that they knew that they needed to seek help. Those that do seek financial planning advice early are generally better prepared as they head in to retirement. They are better prepared, not just financially but also psychologically in that they understand that retirement can be as flexible as they want it to be.

Imagine the peace of mind knowing that you will remain financially comfortable whether you decide to work part-time, volunteer, travel the world, start a business or go back to full-time education. Discussing and modelling these scenarios is best done earlier rather than later.

What Is Holding People Back?

So what holds people back from planning for their retirement? Having had a number of conversations recently with clients approaching retirement, I have highlighted seven reasons why people don’t want to talk about their retirement.

Lack of time – I’m so busy at work that I simply don’t have the mental bandwidth to talk about retirement.
Lack of motivation – retirement for me is several years away so I’ll think about it next year.
Difficult conversations – I don’t know what my spouse or partner thinks about retirement and I haven’t asked them yet.
Readiness - I’m not ready to retire and I don’t want to think about it.
Negative view of retirement – retirement is for old people. I’m not ready for my pipe and slippers just yet.
I want to talk about my retirement but I don’t know who to turn to – I don’t want to be sold a new pension policy.
Fees – it costs a lot of money to talk to a financial planner.

I’m sure that there are many more reasons and do let me know if there are any I have missed.

Having identified these seven reasons, I thought I would highlight how we at Mangu Wealth Management look to address some of these issues.

How We Work

Lack of time – we work with a number of successful professionals and business owners and time is always an issue. We therefore try to maximise the time available we have with our clients and we do this in the following ways:

At the start of our financial journey together, we may look to arrange more meetings rather than longer meetings.
We may look to arrange meetings via Teams or Zoom.
We will look to arrange meetings early in the morning or early evening before or after the working day.
On occasion, we may arrange a Saturday morning meeting.
We will always prepare an agenda agreed in advance so that we cover the important issues.

There will be times when meetings can last longer, especially when we have our Discovery meetings or when we present your financial plan to you.

Lack of motivation – it’s difficult to motivate someone until there is a trigger point in their lives, for example, a colleague mentions retirement or there is a market correction that spurs someone into action. Some recent clients have mentioned a blog post or article that has led them to reach out for an initial discussion.

Difficult conversations – where possible, we would always look to involve spouses and partners in our financial planning discussions. For many clients it’s the conversations they have with their spouse or partner after our meetings that are just as valuable. A Financial Planner asking the right questions and presenting the financial impact of various options can really help in terms of providing clarity.

Readiness – planning for retirement, even if it is several years away or you don’t feel ready, can provide real peace of mind now and provide you with clear steps as to your various options. This then provides you with confidence to take action as you approach retirement.

Negative view of retirement – I do think we need to re-name retirement to something with more positive connotations. Having said that, increasingly retirement is being seen as a new chapter in life, one that has enormous possibilities. One of the primary indicators of a successful retirement is to have something to retire to. That requires a degree of planning.

I don’t know who to turn to – I think that this is an area that is often overlooked by those of us in the financial planning profession. I would always suggest that anyone looking for retirement planning advice should seek out a financial planner that has the Certified Financial Planner (CFP™) qualification and who offers a financial plan as part of their service.

Fees – there is a cost to financial planning advice as there is a cost when receiving legal advice or advice from an accountant. There are a number of studies setting how much value a financial planner provides, although it is difficult to put a price on financial clarity and peace of mind. I would also add that the cost of getting it wrong far outweighs the fees charged by a financial planner.

Conclusion

As we approach the Christmas holidays, now is a great time to reflect on what a successful retirement means for you. Retirement is no longer the day you receive your gold clock, put your feet up and start taking your pension but a life stage with endless possibilities.

Contact Us

If you are looking for financial clarity around your current financial situation and whether you are on track to achieve financial independence, please do reach out for a free and confidential initial discussion.