The ins and outs of retirement with Brendon Read, Financial Adviser and Director

1. When should people start thinking about financing their retirement?

As early as possible. In terms of timing, retirement is usually down the list, but in terms of importance, it’s almost certainly at the top of the list. We often help people improve their financial position as much in the last 5 – 10 years of their working life as in the first 20 or 30 years combined. It’s more challenging to do this if the first time people think about retirement is when they decide to leave work.

2. What’s the typical age of people moving into retirement?

There’s no real typical age. Some people are happy working into their 70’s, while others want to be finished working by 55. What matters more than the age of retirement is the ability for people to have choices around what it is they want to do. Knowing that you’re financially secure and could leave work and be comfortable can be a major source of relief even for someone who chooses to keep working.

3. Are people completely stopping work and retiring or, are they taking casual/part-time roles to help them transition?

I’m a massive fan of part-time work for several reasons. Retirement is a significant life event, and the implications are far broader than purely financial. Loss of social networks, a purpose, a feeling of achievement and status can all affect mental wellbeing after retirement. In my experience, people are often reluctant to work part-time fearing that they can’t afford to. However, in practice, what happens is that people working part-time will usually work a little longer than they otherwise would have, meaning the financial impact is often negligible, but the personal impact is significant. If I had my way, all my clients would work part-time in the lead-up to retirement regardless of their financial situation, as I believe it provides an excellent chance to overcome the other issues I mentioned without ‘cutting the cord’ from work

4. Moving into retirement can mean different things for each of us. For some, it’s an exciting time while for others, it’s a challenging time; finding a purpose and relaxing. What have you seen that works and doesn’t work?

The key that stands out to me is that people need to find a meaningful activity in retirement. Some find it more quickly than others, and it can take many forms, but it’s crucial. Part-time work, volunteer work, looking after grandchildren, engaging in a hobby are all examples of meaningful activity. It can be difficult for people who have been working long hours all their working life to have time to engage in these before retirement – another reason that part-time work is fantastic.

5. How can people understand how long their money will last once they move into retirement?

Unfortunately, at Profusion, we don’t have a crystal ball to know how long retirement will last for people. If only it were that easy! The best that we can do is provide projections for people based on their specific circumstances and trying at all times to err on the conservative side. This process also helps with the setting of goals and understanding what is possible and what isn’t. Knowing what is achievable is crucially important

6. How can someone in their 40’s-50’s work out when they can afford to stop work?

Talk to us.

7. The structure of the traditional family has changed dramatically over the last 25 years. How has that impacted people considering moving into retirement? Are they having to look after their grandchildren and/or take on more domestic tasks for their adult children?

Many current retirees spend time looking after grand-children (My mum spends a day and a half a week looking after mine!). In many cases, this is good for all parties. The grandparents and grandchildren have a chance to form powerful bonds, and the parents can save a bit on childcare. It becomes an issue if the retirees feel that they are limited in terms of what they can do. For example, some feel trapped into providing childcare and aren’t able to travel – it’s at this point that it becomes a problem.

In terms of adult children living at home – this is something I see more and more of. If you’re an adult child, why wouldn’t you stay at home? It’s cheaper, mum and dad generally do the cooking and cleaning, and life is grand. Again, the problem arises when it affects the financial security of mum and dad. Often parents think they are helping their children financially by paying for expenses, when in fact the opposite is the case. The best gift you can give your kids is not to be financially dependant on them when you get old. Be careful how much you spend on them!

8. We are all so much more active and healthier these days, which means we are living longer. What impact does this have on people’s financial planning?

I think that retirees now expect far more from retirement than their parents did. In simple terms, it means that you need more money, and to plan more carefully. The risk of outliving retirement savings is, in my opinion, one of the most significant risks that people face, yet a lot of people would spend more time planning their next holiday than planning retirement.

9. If someone knows a friend who has never received financial advice before, what’s the best way for them to introduce the team at Profusion Planning?

Many of our clients introduce family and friends to us. The best way is to contact the adviser you work with and either give them the name or number or, get the person to contact your adviser directly. Whichever way suits. We will always look after them.

10. When are you thinking of retiring?

With a 1 and a three-year-old at home, retirement seems a long, long way away. Ask me again when the kids are out of the house and retirement means some peace and quiet rather than the current chaos!