Planning is essential in the run-up to retirement, but don't let it take up too much of your time. You need to enjoy life as well.
Plan Your Approach and Position Your Pieces
Once you know what you need and when in terms of spendable money, then you can plan ahead. Part of this might involve disinvesting some money and moving into cash ahead of time so that you’re not hampered by a sudden decline in the markets, much like we’re experiencing right now (the season this blog is based on was recorded in April 2020).
If you know you’re going to need some tax-free cash from your pension, work out how much and when and begin to think about shifting out of investments in good time. It’s a cash event, and as such you should be prepared.
If you retire early, then it’s possible you may not be able to access pensions immediately. In which case you’re going to need to have money in other vehicles that you can access for when the time comes.
Most FIRE proponents advocate having enough in ISAs to cover your short term needs if you can’t access pensions, and I’d obviously go along with that. This is what I mean by positioning your pieces. You should have an idea of what you’ll need to draw when and from what source, so that then you can fund those accounts and position the investments accordingly.
Plan in Reviews, and Live in Between
It can be easy for this to become all-consuming as you approach retirement, but while it’s normal to be thinking about it more than you would if you’re 30 and just building wealth for the long-term future, it need not take over your life.
Give yourself boundaries and try to confine your thinking and planning about this to those times. When you actually do retire, I’m going to suggest that you only review formally one a year, with short quarterly check-ins between. This is important to enable you to enjoy your retirement – that’s what it has all been about after all!
Seek Professional Advice
Finally, a plea to consider professional financial planning advice at this crucial time in your financial life, and remember that there’s a difference between financial planning and financial advice. Planning is about, well, planning, and advice is more about solutions that can be sold to you; investments, pensions and the like.
You need to seek out a professional financial planner, someone experienced in helping their clients navigate this crucial transition, and not someone who wants to flog you their investment approach or their preferred pension provider.
You want someone who will take a long hard look at your existing provisions to help you optimise it, rather than starting from the position of ‘we’re going to move this money no matter what’. Get in touch with me via the MeaningfulMoney website – I have many contacts around the country who can help you, and I may even be able to do so myself, subject to capacity!
OK, let's keep going.
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