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The Risks of Ignoring Financial Planning Before Retirement

Everyone’s circumstances are different and each person’s individual approach to a situation will differ from the next person. This also applies to retirement, financial planning, and the research and preparation involved in each. There will be the super-organised and detail-loving individuals that know every single aspect of their retirement plan and what their annual income will be throughout their later years.

On the other hand, there will be people who like to go with the flow, are more relaxed about retirement planning, and probably have not given it a second thought. This is where the danger lies as most people spend more time planning a two-week holiday than a 40 year retirement!

Wherever you fit on this imaginary chart of retirement planning, you need to be aware of the potential consequences of taking minimal or no action at all. So even if you sit comfortably in between the two extremes discussed above, do not underestimate the importance of starting early and keeping on top of the situation.

Without the help of a financial planner and a structured plan, you could coast along and ride your luck for a few years but the earlier you get your affairs in order, the better for you it will be long-term. You may have to address the following areas which can be complex and unpredictable without expert advice and financial guidance:

Will my income match my outgoings?

Your retirement income needs to exceed your ongoing, obligatory payments or you will end up in debt. The earlier you start saving and determining how much to put away for retirement to have the lifestyle you want, the better off you will be in the future.

When could I run out of money? 

Savings do not last forever. A financial planner will be able to tell you how long you can realistically continue with your current spending trends and patterns before you run into trouble. They may also bring the future into the present to determine how much you need now to ensure you’ve saved enough so that doesn’t happen.

Can I keep up with my charity donations?

This largely depends on your disposable income but without being pointed in the right direction and capping your generosity, you could be giving away more than you can afford to.

What happens if I need long-term care?

This is an important aspect of your future that you cannot leave to chance. Illness can strike at any time no matter what your age might be and if you are not financially prepared for it, you or a loved one may have to suffer in substandard conditions until you can get the help you need.

Can we assist our children financially by gifting them money before we die?

Again, without the right financial advice, you could land yourself in a spot of financial bother as there are rules and regulations regarding inheritance tax and where and when you can give your children financial assistance. If you have any ties to the UK, where inheritance tax is 40%, your loved ones might get stuck with a substantial tax bill if you don’t ahead.

Is my capital in tune with inflation?

You could be losing money by having your savings in a bank and missing out on the power of compounding if your money is not invested or invested correctly. Small amounts soon add up over the years and could be a handy lump sum that you will miss without some financial guidance.

If you have your money, pensions and assets invested according to your risk preference and inflation you can avoid many potential challenges down the road.

Making sure you have “enough

Retirement might seem miles away, but the time comes around very quickly. If you want to have “enough” to live the life you’ve always desired and have peace of mind knowing that your money (and life) will be in order during retirement, contact our team today.

Through our life-centred wealth management approach and our award-winning LifePlan process, our financial planners will help you to decide what you need to do today to create a brighter tomorrow.

After all, life is not a rehearsal so let’s make it count!

Click here to book your free initial consultation, email us or simply call us +852 2598 6777 to learn more.

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