How to Retire in Style

How to Retire in Style

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Human beings, it is said, are distinguished from other species by their ability to think. Whilst this may be true, it is also true that most of us have difficulty thinking about the long term and preparing for it. We’re all caught up in the daily ‘thick and thin’ of things. It’s difficult enough to plan something, like a vacation, just six months ahead, so how are we supposed to be able to think about something in the very distant future — like retirement?

Thinking in advance, and acting on these thoughts, are keys to being ready for the future when it turns inexorably into the present. The younger you are, the more distant retirement seems — and the more power you have at your fingertips in the form of compound returns over time — this paradox can work to your advantage.

Making preparations for retirement

Some of the important questions we should ask ourselves are:

  • How much will I need for my retirement in order to live comfortably when the time comes?
  • What are my goals?
  • When should I start?
  • What should I do?
  • What expenses might I have once I’ve actually retired?

We often wait too long to ask these questions; they may surface dimly on occasions in a remote and dusty corner of the mind.

A mind that is otherwise occupied with this minute’s conversation, today’s project, tonight’s movie, and tomorrow’s meetings.

The 12 steps

In preparation for that comfortable retirement, you should consider the following 12 steps:

  1. Recognise that retirement is more than choosing a date to do so.
  2. Determine what it takes and how to get there.
  3. Know how your job/profession contributes to your retirement needs.
  4. Recognise when to use tax-deferred savings, and when not to.
  5. Invest for the future — and into the future.
  6. Be aware of the impact of working during retirement.
  7. Recognise that your home is a lifestyle asset and is unlikely to produce income.
  8. Remember that taxes do continue after you retire.
  9. Determine how you will receive retirement plan benefits.
  10. Ensure your hard-earned wealth stays in the family.
  11. Examine your insurance needs, particularly medical coverage.

The final step

And what about Step 12? The step of utmost importance, the one that, if forgotten,

condemns us to a life of never-ending work!

Here it is:

Step 12 (a) When all else fails, repeat Steps 1 to 11!

Why do we say this? Because plans are just that — plans. As such, outside influences over which we have absolutely no control can destroy them.

The first 11 steps deal primarily with financial planning but what about life planning?

Step 12(b) Reflect on the personal issues of retirement.

Think about it. You know what they are. When you no longer work, you have plenty of time to fill. When the golf or bowls game becomes boring, what will take its place? During our working lives we have many social contacts with our co-workers — who will take their place to satisfy our basic human needs for companionship and social interaction? One thing is certain — a couple, no matter how devoted to each other, cannot spend 24 hours per day, day after day, in the exclusive company of one another. Both need outside interests and companions.

There are other quality-of-life issues, such as housing and its location, physical health maintenance, availability of community services, both volunteer and compensatory work, educational interests, and leisure pursuits. These issues will define our life and happiness during retirement. Money is the tool that keeps us physically comfortable, but these are the factors that make us who we are. They determine how we live and behave. Statistics now show an increase in longevity, so we’re likely to spend at least one-third or more of our lives in retirement.

Retirement is that time of life when we have gained sufficient experience to lose our jobs. Put another way, we want to reach the stage where, having worked all our lives to make money, we now want our money to work for us!

Bryan Hirsch
BRYAN HIRSCH has been in the financial services industry for 47 years and is a director of Bryan Hirsch Colley & Associates. He has written two books, the first Bryan Hirsch’s Guide to Personal Finance and more recently, Steps to Financial Freedom. Bryan has written for many of South Africa’s top financial and business publications, has been a weekly guest on Radio SAFM for 18 years, and has his own weekly TV show You & Your Money on Summit TV.