Covering critical factors to consider in the lead-up to your retirement, the recent Citadel Remarkable Retirement Workshop, offered a holistic view of maximising the value of your golden years.
“Situated in the eye of the COVID-19 storm, 2020 is proof that the unexpected happens,” said Citadel Director, John Kennedy, who served as both a panelist and moderator. “There’s no better time to give thought to our lives, plans and strategies, and talk about retirement,” he said.
The webinar saw a panel of experts delve into multiple considerations when planning for your future.
PLANNING FOR A FULFILLING RETIREMENT
Independent senior management consultant, Dr Anne Blacklaws suggested asking what a fulfilling retirement would look like for you. What’s important is not just having the money, she said, but asking what you’re going to do with it in retirement.
Blacklaws discussed “rewirement” as opposed to retirement. She called it a necessary mindset shift. “In retirement, we’re not just leaving something,” she said. “We’re going towards something. We need to think about how to create a remarkable future for ourselves.”
This starts with setting short, medium and long-term goals. Then she suggested you formulate contingency plans to cater for the unexpected. This requires a flexible retirement strategy, not just one plan that you keep repeating.
Blacklaws highlighted key aspects of a fulfilling retirement which include having a tribe of close friends and family, having fun, doing purposeful activities in line with new and old interests, and building a legacy – something that lasts beyond you. She said that ultimately, everyone naturally becomes more risk averse as they get older, so we need to dream big and grab opportunities while we can.
A FINANCIAL STRATEGY FOR RETIREMENT
Kennedy outlined how to design and implement the financial strategy that underpins your retirement plan. You need a thought-through, purposeful roadmap to retirement that speaks to your desired lifestyle, he said.
In building a financial strategy that allows you to live well and end well, you need to take a long-term view, rather than just focusing on the now. Consider what you can control, he suggested, your personal economy.
Bearing in mind that you may live to 95 and beyond, make a timeline of what dreams and goals you want to realise during retirement. Then put numbers to it. Involve your family in this process, whilst considering what financial needs will come with each phase of your life going forward.
“Your expected lifestyle needs to be supported by your asset base,” said Kennedy. Factoring in inflation, determine which regular expenses you’ll encounter in each phase, for example your medical aid costs. Then add any lump sum payments you may need to make, for example when moving to a retirement village or buying a new car.
STAYING WEALTHY IN RETIREMENT
Citadel Advisory Partner, Riaan Campbell highlighted the material risks to preserving your wealth and your lifestyle in retirement, and suggested ways to mitigate these.
Among the key areas he highlighted were managing your spending, making sure it’s within an acceptable range as a percentage of your investable assets. One of the major risks to your retirement capital is concentration risk – having all your eggs in one basket. Black swan events like COVID-19 can derail your retirement plan which is why it’s so important to diversify your assets, he noted. He also suggested avoiding investment “schemes” that guarantee high returns as these often turn out to be scams.
Having a wealth advisor to partner you on your journey to preserve your wealth and your lifestyle can prevent you from permanent capital losses and making sure you achieve your retirement goals.
ENDING WELL
Citadel Fiduciary Managing Director, Hilary Dudley revealed ways to streamline the process of estate planning and to handle the family dynamics that often arise. The process by which you arrange the administration and transfer of assets in anticipation of your death, estate planning involves your will, trusts, donations, and power of attorney to mention a few. While it’s never too late to start estate planning, said Dudley, it should ideally be done before creating a retirement plan.
Estate planning should be an organic process, she emphasised. You will need to revisit your plans as you and your family’s personal circumstances change. Your estate plan needs to be flexible enough to accommodate inevitable unexpected events. It’s also advisable to consult a trusted advisor especially when it comes to managing the legal and tax framework into which your estate falls.
Dudley stressed the importance of involving your family in estate planning to limit surprises after you’re gone. Don’t avoid the difficult conversations,” she said, “rather be open and discuss things while you can still resolve them.”
RETIREMENT IS NOT JUST A WALK ON THE BEACH
Independent strategic planning expert, Paul Britton, then shared his personal story of being forced into early retirement. Far from conforming to the great marketing illusion that retirement is “just a walk on the beach,” Britton was completely unprepared for the reality.
While he continued working as a consultant, six months into his retirement, Britton found himself feeling empty and useless, having lost his sense of meaning. Researching his depression, he found a book called The Psychology of Retirement and discovered his problem, a recognised retirement syndrome called six month syndrome (SMS).
Britton stressed the importance of “rewirement” in overcoming his SMS. “It’s about finding a new purpose in life and continuously growing,” he said. “When you take away the identity you built through your work, who are you really? Where do you want to go?” Now’s the time you have true freedom of choice.
Nurture your mind, body and spirit, he added. If you have a partner or spouse you need to formulate a shared retirement strategy, one where you give each other space to grow.
FINDING A BALANCE
Ultimately, retirement is about finding a balance. Not only do your finances have to be managed through a sound plan, but family, friends and your psychological well-being need to be factored in. Reaching your remarkable in retirement requires a holistic approach when planning for your future.