I have attended many financial talks where they use scenarios to show you what your situation will look like in retirement. Many times I have heard the question asked from the audience “what if I have not saved enough? In fact I have less than half of your worst case scenario in investments”. In most case the answer I hear is “well it is too late to do anything about it.” I believe it is never too late.
If we lived in a perfect world we would have saved 15% of our salary from our first pay cheque and had a handsome sum by the time we retire at 60. We all know life is not perfect and that we are faced with many challenges along the way. Death of a spouse, divorce, retrenchment, lack of discipline, spending and not saving our money when we change jobs. The list is endless and our current statistics on how many do not have enough savings is an indication that life is not perfect. Add to this challenge is the fact that we are now going to live longer and even those who have been lucky may feel vulnerable.
What can one do about this massive challenge? Here are some of my ideas that I use when coaching and helping people.
- Take your head out of the sand, face your reality and know what your scenario looks like.
- Asses your short, medium and long term debt and start to put a plan in place to decrease your debt as soon as possible. One should not be paying off homes and large debt on credit cards close to retirement.
- Take a look at your monthly expenses and start to work on what is essential. It is time to take a serious look at your needs and wants.
- Your home is not an asset until you sell it. It may be time to make a decision to downscale or find ways to use your home as an income generator. Please make sure that you are very clear of all expenses and options if you want to downscale.
- Ensure that you consolidate your investments and know what your monthly income may be if you start to draw down at 60. Work with a reputable financial planner.
- The best plan is to not draw down early but to allow your investments to grow for an extra 10 years if possible.
- Work with a career transition coach to assess how you can continue earning enough to cover your monthly expenses without drawing down from your investments.
- Reinvent yourself, design a new career, go back to study, hone in on your computer skills and start networking.
- Relationships and networks are key assets in this phase.
- Dream again.
This is the first generation heading towards retirement who have gained an extra season of life. The convergence of longevity and technology are an amazing opportunity. Take action now. A plan can take up to five years. Start today. Don’t wait till the day you retire.
Lynda Smith is a career transition coach and can help you to put a plan in place.