As we are retirement planners, you might imagine that our clients tend not to have retirements which aren’t planned for, and you’d be right that most of our clients work with us to plan their retirements and execute their plans.
However, there are occasions when accidental retirements occur. Health is a common cause of an early retirement, and there can be other times when retirement is forced upon us. Of course, retirement can creep up on you – it can take time for some people to recognise that they aren’t going back to full time work.
We can still help when a retirement is unplanned, but a few adjustments are needed to our standard process.
The first thing to do, when retirement is thrust upon you, is to make sure you don’t panic. In fact, our advice might be that you should do nothing at all. You are most likely to make financial mistakes when you are vulnerable, and that often coincides with the time you are under stress. Fraudsters know that, which is why they usually victimise people in difficult circumstances. Some of the decisions about your retirement are irreversible, and if you make a decision quickly, you may spend a lot of time regretting it.
So, if your retirement is unplanned, our first recommendation is that you take stock of your financial position. That means working out what your assets and liabilities are, how much income you will have, and what your expenditure will be. Spend some time analysing your expenditure, and make sure you know what your unavoidable expenditure is made up of.
The next step, for most people, is to put yourself in a position where time is on your side, and this will give you a feeling of greater control. This means that you will have enough money in accessible bank accounts, to cover the difference between your outgoings and income, probably for six months or so. Most of our clients, and many others, will have this amount of money set aside – after all, an unplanned retirement is an emergency, and most of us know that one of the first rules of financial planning is to make sure that you have an emergency fund.
If you don’t have sufficient accessible cash for the next six months, this might be the first item, about which you should take some advice. It’s likely that you will be able to take money out of your pensions and investments, but it is important to ensure that you do not make a costly or irreversible mistake when you do so.
Once you have your funds for the next six months set to one side, it’s time to engage a financial planner. If you don’t already have one, having the funds in the bank will give you time to choose the right adviser to help you to plan your retirement properly. You should expect to work with your financial planner throughout your retirement, so, finding the right one for you is important.
During this planning period, we can work with you to decide what type of retirement you would like to have; we’ll help you to work out what you can afford to spend, and what pattern of retirement spending suits you – are you happier spending more at the start of your retirement, in the knowledge that you may have to cut back later, or would you prefer to be more prudent in the early years, in the expectation of greater comfort in later life?
If you do find that your retirement is unplanned, we can help you make the best of a difficult situation, and to make sure that your financial resources work effectively for the rest of your life.
Philip Wise | philip@sussexretirement.co.uk
Managing Director and Chartered Financial Planner
