Retirement in 12 Steps

Retirement in 12 Steps


Human beings, it is said, are distinguished from other species by our ability to think. While this may be true, it is also true that most of us have difficulty thinking about the long term and preparing for it.

We are all caught up in the daily ‘thick and thin of things’.  In this way we carry with us the immediacy of our animal cousins. 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 to prepare financially for this time. Some of the important questions we should ask ourselves are how much will I need for my retirement in order to live comfortably? What are my goals? When should I start? What should I do? What expenses might I have once I have retired?

Start preparing for retirement today

We often wait too long to ask these questions. They may surface dimly on occasion, in a remote and dusty corner of the mind. 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 will take 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 cover.

And what about step 12?

This is 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 – 11.

Why do I say this?  Because plans are just that – plans. Outside influences over which one has no control can easily destroy them.

Be prepared

As the two-handed investment analyst says ‘on the other hand’, your plan may not fail, it may work wonderfully.

However, the first 11 steps deal primarily with money issues.  They fail to address those facets of retired life that have little to do with finances.

So, let us look at step 12 b)

Reflect on 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 games become boring, what will take their 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 a day, day after day, in the exclusive company of one another. Both need outside interests and companions.

Quality of life

There are other quality of life issues such as housing and its location, physical health maintenance, availability of community services, both volunteer and paid 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 factors that make us who we are.  They determine how we live and behave.  Statistics show an increase in longevity so we are likely to spend at least one third or more of our lives in retirement.

Retirement is that time of life at which we have gained sufficient experience to lose our job.  Put another way, we want to reach the stage where having worked all our lives to make money we 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.