There's no shortcut to retirement
During September, I enjoyed a couple of short breaks to Marseille for the Rugby World Cup. Although the trips were short, they required a considerable amount of time and planning.
Booking flights and accommodation is the easy bit. Ish. Next, you’ve got to plan your itinerary, research the pit-stops, decide whether to pay by cash or card, and figure out how to get from the airport to the hotel, let alone the Old Port to the Stadium, and brush up on the lingo. Then you can let go and enjoy the flow.
On the day I exchanged my British Pounds for Euros, an enquiry came through from a prospective client. He was a teacher and wanted help with his pension, a well-intentioned staffroom conversation had got out of hand; the whys, wherefores and what-ifs had got too much. I explained that I was a little stretched for time, but I’d be available in October. He said this would be too late as he needed to resolve the issue by the end of the month.
I told him he could get reliable, factual information from the Teachers’ Pension members’ area or call them. Guidance perhaps from PensionWise. To avoid the queues and in an effort to be helpful I sent him an explanatory factsheet. Personalised, professional financial advice, though, would certainly not be an overnight process.
Even if I had been able to see him this month, I explained we’d need more than 30 minutes on the phone together to come to a solution. I’d need to ask him a series of questions to learn about his finances and goals. I’d need to understand him before making any recommendations. He’d then almost certainly need time to weigh up his options and make a decision.
The conversation got me thinking about how common it is to underestimate the importance and complexity of retirement planning.
There are no shortcuts
This person certainly isn’t the first to want a shortcut or quick fixes. It seems to be human nature, particularly when we feel overwhelmed or don’t have a clue about where to start.
Some people bury their heads in the sand completely until it’s too late. They don’t even want to think about it, perhaps because they’re embarrassed about how little they know about the issue at hand. They might not even know which type of pension they have, let alone whether they’re on track to retire.
Pension procrastination is rife. “I’ll sort it out next month,” some might say, only for months to turn into years. This is completely understandable – I’m always conscious of how intimidating it can be to think about these things. But if this sounds familiar, I’m about to get a little tough with you: in fact, I’d encourage you to consider what impact this inertia could have on your future. Will you have to push retirement back a few years? Will you be able to go on all the holidays you want? Will you be able to help your grandchildren buy homes and get married? Taking action now might feel uncomfortable, but it’ll be even worse if you put it off a year.
And then we have those who assume that a financial planner is the solution to all their problems. They might compare it to hiring an accountant or bookkeeper. If they hire someone who can do the job better than they can, they can wash their hands of the task… or so they think.
Engaging with your financial future
It’s really important to hire a financial planner before making a big decision, but even with me at your side, you can’t disengage completely. Thankfully, you don’t need to be good at maths nor understand the intricacies of the stock market to engage with your retirement plan. It’s about much, much more than that.
The main focus of our work will be on the answers to questions like these:
What do you want your retirement to look like?
What does this mean you’ll need coming in?
Besides money, what else is important to you?
How do you picture your life in five years from now?
Is there anyone you’d like to include in these conversations?
Are there others you’d like to support financially?
I don’t expect you to have an answer to these questions straight away. It can be hard to plan 10, 20, or 30 years into the future when life presents us with so many variables. Together, we’ll work our way through these questions (and others) until we’ve painted a picture of how you’d like your future to look versus the retirement you’re currently on track to achieve.
We’ll also need to take your estimated lifespan into account. The earlier you want to retire, the more important this is to your overall financial plan. Today, the average 40-year-old has a one in ten chance of living to 100, but do they have enough money to see them through to the end?
Good retirement planning is important even if you’re unlikely to see your 100th year. With our lifestyles, families and finances constantly in flux, regular assessments are crucial. The plan I lay out for a 50-year-old will have been tweaked many times over by the time they’re in their mid-60s, and further into retirement.
Planning a holiday (even if it’s just a 3-day trip) tends to take longer than the experience itself. The same is often true for retirement. “You’re trying to make a decision in 10 days that will affect you and everyone else around you for the rest of your life,” I said to the potential new client who got in touch with me.
Fortunately, they agreed to meet me in October.
Marseille, by the way, was Merveilleux!
It didn’t all go to plan of course, but c’est la vie. Allez les Bleus. Peut-etre.