What’s your financial freedom number for retirement?
By Jenny Brown – CEO and Founder
Retirement is on the cards for all of us at some stage, but what life looks like post-work is very different for us all. How do you make sure you save enough to get the retirement you want?
Do you have a plan for retirement? Now I don’t necessarily mean what age you’re going to retire at if indeed that is your plan. I’m talking about what you want to do when you retire from working full time?
Do you have a plan for retirement? Now I don’t necessarily mean what age you’re going to retire at if indeed that is your plan. I’m talking about what you want to do when you retire from working full time? For those who have read my articles and blogs or watched my videos in the past, you’ll know that a common theme I talk about is ‘knowing your financial freedom number’ I suggest how you obtain that is by listing down what you want to be doing in retirement.
Ask yourself the question: is retirement tending the veggie patch, looking after the grandkids, playing more golf or bowls, taking those art classes, travelling to each of the points where 2 oceans meet around the world, driving Route 66 in a convertible Mustang, ticking off all the possible cruises you can go on, or all of the above!
Whatever it is, it needs to be important enough to you, to ensure your plans for saving and investing are a priority to get you to that point where you can tick off the bucket list items. We really encourage our clients to take the time to consider this as early as they can, to ensure that we are able to put the right plan in place that works for them.
Once you have decided on what you want to do, when you can move into that phase where you are no longer working because you want to, rather than you have to, at that point, it’s then about how much money you will need to tick off the bucket list items, plus how much will you need to run the household.
Many of our clients come to us with the idea that they won’t need as much to live in retirement as they do when they are working, however, what we’ve found, especially in the early years of retirement is that they do. In fact depending upon the bucket list, sometimes it’s more! So, it’s best to ensure that you separate the “living” part of your income you will need, from the bucket list and travel income you will need. That way you will know it will last as long as you need it to.
The next step is to plan out with your adviser how much you will need as a lump sum at retirement to be able to generate both the ‘living’ income and the ‘bucket list & travel’ income and do this early – the best time to start is the present, today, not tomorrow!
Once you have that, then you need a plan to get there. How much do you need to invest each month to ensure you will end up with the financial freedom number that will allow you to retire and do the things you want to do. What to invest in to really comes down to how much risk you need to take on – do you have such a big goal that you need to invest more into growth assets, or have you been saving for quite some time and are comfortable with the path you are going down and as a result can have a nice balance of both growth and income-producing assets. And finally, whether to invest inside or outside superannuation, or a mix, this will depend upon many factors. The right plan will cover all of these areas.
What you need to concentrate on is putting that plan in place, setting the bucket list up and ensuring you are checking in regularly with your adviser to know that you are on track to achieving your goals.
Remember once you retire, you’re still investing for the rest of your life, which may be anywhere upwards of 30 years.
So, let me finish by asking you this: do you have the right plan in place, does it work for you, does it need a re-work, and will be the right one once you reach that financial freedom number to allow you to actively live the life you want to live.
Reach out and discuss your situation with the JBS Financial team.