HomeRetirementRetirement PlanningFive steps to a happy retirement

Five steps to a happy retirement

As a financial advisor, I’m lucky enough to listen to how people define their ‘ideal’ retirement, and many years later, compare this ideal with their reality. They can often confuse success with happiness – that is, until they are able to move from material items to memorable experiences.

Being able to tap into and discuss the experiences of those who have already retired provides great insight (and shortcuts) to make sure we understand the reality of what is about to come.

There appears to be a disconnect between how society currently defines success and real, lasting happiness. When people equate owning things with greater happiness, it can make it difficult for them to make experiences their focus. In my opinion, consumerism breeds excess, frustration, greed and fundamental delusion. It is an illusion of happiness.

But in the end, retirement is your reward for hard effort and about getting what you want – that is, being happy. And if there is a secret to being happy, it’s this: be true to yourself. Spend the time on you and understand what makes you happy.

I’m sure you have heard it before: If we fail to plan, then we plan to fail. It’s a cliche? because it is true!

Interestingly, we plan, research and save for our first car, wedding, children’s education and first home. Yet only one in five of us plans our finances early enough for the last 20–30 years of our lives. The others need to accept the consequences.

So, what can you do? Here are five easy steps to consider:

1. Decide what you really want and align your financial decisions.
This takes an awful lot of work, which is one reason why most of us don’t do it. But once you know what you (and your family) really want, you will know what to do.

2. Know what you have available.
In the beginning of some client relationships, I feel like more of a financial organiser. Identify the exact location of all information and documents that represent your financial life. Take the time to place this pile of stuff into workable order.

3. Know where your money goes.
Almost half of us don’t know what we spend our money on each week, with thousands of dollars being ‘lost’ because of leaks in spending. We don’t even realise how much we’re actually spending on smaller purchases. If we did, and changed our habits just a little, we could actually improve our financial future.

  • These purchases may appear insignificant, but thinking about the small things you spend money on each day can really make a difference between your retirement savings outliving you, or worse, you outliving your retirement savings.
  • Put simply, having a budget is the most effective tool there is to get and keep your finances under control. You will know where your money is going, where you can cut back and where you can save.
  • But here’s the thing. As I mentioned in the September issue, a budget doesn’t lock us into a situation. Instead, it provides a framework within which we make future financial decisions.

4. Determine whether you will go it alone or seek professional advice.
Your retirement planning is serious stuff and there are many variables which can alter your outcome. When we go it alone, we have a tendency to assume that what we do know is more important than what we don’t know.

  • A qualified professional is required to meet stringent training and will support you through the maze of options you will encounter. This will include maximising your superannuation and income stream options, your Centrelink entitlements, and making sure your investments work together as well as match your goals.
  • But the real benefits will often be intangible and ensure your behaviour is consistent with the promises you made to yourself. For example, a professional can:

    • bring order to that pile of stuff
    • stand between you and doing something silly especially when financial markets react negatively
    • ensure that you stick to your plan when your neighbour, brother-in-law or someone else provides you with the next ‘sure thing’ investment
    • regardless of which option you choose (going it alone or seeking professional advice), make sure you invest in low cost funds and don’t look at your investments each day.

5. Don’t compare yourself to others.
Go back to step one and don’t be side tracked by someone else’s goals.

And here is my bonus tip:

Quite often we fall in love with the idea of retirement, believing it is the ‘magic pill’ that will ensure we ‘live happily ever after’. We then cease work only to find we have lost our identity and purpose.

I have learned that planning your retirement income needs is just as important as planning your retirement lifestyle needs. So, also think about how you will spend your time.

A good friend and client shared with me some years after his retirement what he termed ‘relevance deprivation syndrome’ – that is, being used to being someone, and then one day you are not. Fill that void early.

Do you have a question for Maurice? If so, send us an email.

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