Retirement planning through different life stages

What Do You Need to Consider?

Here are a few aspects to consider at different stages of your lifetime.

At the Beginning of Your Career

• Start saving early. Compound interest benefits those who start saving sooner, and even small, consistent contributions can grow significantly over time.
• Employer contributions. Take full advantage of employer retirement plans.
• Develop budgeting habits. This skill set will stand you in good stead. Good spending habits allow you to save more and will help you to achieve your goals throughout your life.
• Invest in growth assets. With many years until retirement, focus on growth-orientated investments that offer higher potential returns.
• Make use of the most appropriate products. There are many product options available to investors, so ensure that you get financial advice to assist you in making the right decisions from the start.
  
  

When You Get Married and Start a Family

• Reassess your investments. With additional family obligations (which may also include homeownership), consider a diversified portfolio that balances growth and stability.
• Plan for education costs. Make sure that you balance your retirement savings with other financial obligations like saving for children’s education, rather than sacrificing saving for retirement entirely.
• Review your insurance needs. Ensure that you protect your family’s financial future with adequate life and disability insurance.
  
  

When You Are Seasoned in Your Career

• Reassess your risk tolerance. Adjust your portfolio so that it is aligned with your goals and objectives.
• Estimate retirement expenses. Assess the lifestyle you envision and anticipate any large costs you may encounter, such as medical or travel expenses.
• Plan for healthcare. Consider what healthcare insurance needs you have, and bear in mind that healthcare needs generally increase in retirement.
  
  

As You Approach Retirement

• Consider your retirement budget. Estimate the income you will need to cover your retirement expenses.
• Plan withdrawal strategies that are aligned to your goals and objectives.
  
  

At Retirement

• Monitor your spending. Stick to your budget and be mindful of withdrawals to avoid outliving your savings.
• Adjust your investments based on longevity needs. Be aware that some growth assets may still be necessary to account for inflation and longevity.
• Consider healthcare and estate planning.
  
  

Understand the Importance of Longevity Risk

Bear in mind that several factors have positively impacted human longevity over time, which has contributed to the increase in average life expectancy worldwide. Increased longevity requires a thoughtful, flexible retirement plan that anticipates not only a longer life, but also the changing needs and challenges that come with it.

Revisit your Plans Over Time

Allan Saunders famously said that “Life is what happens while we are busy making other plans.” Remember to give the necessary attention to what is truly important to you, rather than spending too much time focusing on ‘other plans’.

Throughout all life stages, it is very important to review your financial plan on a regular basis and ensure that the necessary adjustments are made to align with your goals and objectives. Getting expert advice can certainly be beneficial here, so consider partnering with a financial adviser for the journey.

 

Frequently Asked Questions

Why is it important to start retirement planning early in your career?

Starting early allows you to take advantage of compound interest, which helps small, consistent contributions grow significantly over time. Additionally, early budgeting and investing in growth-oriented assets lay a strong foundation for long-term financial security.

How should retirement planning change when starting a family?

When starting a family, you should reassess your investments to balance growth and stability. It’s important to save for children's education while continuing to prioritize retirement savings. Additionally, reviewing and updating life and disability insurance is crucial to protect your family’s financial future.

What are key considerations for those in the middle of their careers?

During this stage, reassess your risk tolerance and adjust your portfolio to align with your goals. Estimate your retirement expenses based on your desired lifestyle and anticipate major costs like healthcare or travel. Planning for healthcare needs becomes increasingly important.

What steps should you take as you approach retirement?

Focus on creating a retirement budget that estimates your income needs. Develop withdrawal strategies that align with your goals and objectives. Reviewing your investment strategy to ensure it accounts for longevity and inflation is also essential.

How can retirees ensure their savings last throughout retirement?

Retirees should monitor spending closely and stick to their budget. They may need to adjust their investments to include growth assets for inflation protection. Additionally, planning for healthcare costs and estate planning helps ensure a secure financial future.