Why it is important to have a retirement plan in place

| Editor
With Julian Lingard Private Wealth Manager,

Why is a retirement plan important? 

Retirement planning is important because it can help alleviate the risk of running out of money when you decide it’s time to stop working and relax. 

“It’s important to have a retirement plan because without a plan you are unlikely to get to where you want to be” explained Julian Lingard, Private Wealth Manager at

A retirement plan allows you to start calculating early how much you need to save, what you should invest, and what you can spend. 

“Sitting back and expecting that everything will fall into place usually ends in disaster. It’s like cooking a special meal, you use a recipe to make sure you get the end result you are looking for. A retirement plan is a recipe to get the end result you are looking for.” 

A comprehensive retirement plan incorporates setting money aside for doctor bills and possible long-term care costs. So you can relax knowing all your expenses are covered, and that your family won’t have to fill the gap. 

“If people don’t plan for retirement, or leave it too late, they can end up not having enough money to have the retirement they had dreamed of having.” 

Starting late means they have to work so much harder to accumulate the wealth they need over a much shorter period of time. 

“This has a detrimental impact on their quality of life nearing retirement, and they are still not likely to have the outcome they had hoped for.”

When should I start planning my retirement?

 “Starting as soon as possible gives you a better opportunity to be successful. It gives you the opportunity to grow more wealth, or to reach your goals more easily without having to sacrifice your lifestyle too much along the way” explained Lingard. 

 While starting as early as possible is always important, it's OK to start tackling retirement in your late 30s and early 40s.

 “At we set up successful retirement plans for clients in their 40’s, and even 50’s, all the time, but the longer you leave it the more important it is to speak to an expert to make sure all your money is working as hard as it possibly could in the right places.”

What does success look like? 

“A client engaged with us to work out how to reach their financial and retirement goals,” said Lingard. 

“They already had some investment properties which they had owned for a long time, and they had a family bach in Nelson, as well as a family home. They had aspirations to help their children into their own homes which meant forking out $200k to each of their two children. 

They also dreamed of spending retirement by the beach at the Nelson property, so that had to be paid off before retirement, and they still had a small mortgage against their family home.

Our plan involved the following: 

1. Selling off two of the three investment properties they already owned. This allowed them to pay off the mortgage on the bach in Nelson  and the mortgage on their own home

2.We then used the equity in their own home to purchase a brand new investment property that will be sold off later to provide the lump sum they need to help the children into their own homes

3. They are now set to retire in Nelson, 5 years prior to retirement (age 60), with $100k tax-free each year from age 60 to live on with these funds expected to last until age 96.

How can help? 

Everyone’s retirement aspirations and financial situations are different, which is why works with our clients to truly understand what’s important to them. 

“Once we understand their goals, we work with them to create a plan that considers what is important to them and map out how we are going to help them achieve their desired outcomes.”

Firstly, asks the client what their financial goals and objectives are. 

“We find out what their time frame is for achieving these goals and objectives throughout life leading up to retirement. For example, they may have family overseas who they want to visit every year and it will cost them $20k per annum to make sure they can continue to do that.”

Then looks into what else is important 

“This will usually include things like helping children with tertiary education, helping children into their first home. They might want to have a holiday home somewhere for the family to enjoy. It may be they want to retire early (Before 65). How much do they want to have available each year to live off in retirement?

We manage all components of the client’s financial requirements so the client doesn’t have to coordinate multiple advisers who don’t often understand how everything interconnects across different financial products.

“This is what sets apart. We not only create the plan, but we implement the different components on behalf of our client, then monitor and adjust the plan to make sure the clients stay on track.” 

 **Please note: client specifics have been altered for privacy reasons