"There are no guarantees in life"

When preparing the retirement planning seminar in late 2016 and early 2017, I wanted to find a way to acknowledge Dad’s role in developing our business over many years and more particularly his role in building up the retirement planning aspect of the business which now accounts for approximately 70% of what we do.

Some of you reading this would know that Dad was diagnosed with pancreatic cancer in June 2014 and eventually succumbed to this terrible disease in July 2016 at the relatively young age of 73. Dad worked passionately in the business, notching up close to 42 years at the time of his diagnosis. When speaking with clients of his I regularly hear how much energy he had and how positive he was. They also say how much of a surprise his death was given that he was so full of life.

Something that continues to resonate with me when thinking of him was something I heard from a very young age right through to the time of his death. He would often say “There are no guarantees in life”. It’s something that always sits at the back of my mind when considering different aspects of life, whether that be business or personal because there are so many occasions where things do not turn out how you expect.

I found it very easy to relate this comment into the retirement planning presentation because there are so many uncertainties facing people about to retire. The main concern people express at retirement is – how long will my money last?

While we can reference life expectancy tables from the Australian Bureau of Statistics to get an idea of how many years someone about to retire may live, we know that this represents an average and there are so many variables to consider. We also know that it is impossible to predict share market returns in the future. The uncertainty regarding these two factors is arguably the most significant challenge when planning a retirement income for a retiree’s remaining lifetime.

Retirement planning has evolved over many years. Fortunately the days where most people withdraw all of their superannuation when reaching retirement are behind us. For some years now the focus has been on setting up retirement income streams, primarily through the use of Account Based Pensions. But these alone do not address some of the major uncertainties or risks associated with retirement. In particular longevity risk (the risk of running out of money) is not addressed with the use of an Account Based Pension alone.

There is also a much greater awareness of concepts such as the retirement risk zone which refers to the crucial period in the years leading up to retirement and in the early years of retirement. During this period, large share market losses can have a devastating impact on future retirement income. Research shows that adjustments to asset allocation during the retirement risk zone is a critical aspect that needs to be addressed in order to combat such possibilities.

It is certainly true that “There are no guarantees in life” however with appropriate financial planning advice we are able to give our clients greater certainty for their retirement journey.

We are running free retirement planning seminars this year. We discuss these risks and uncertainties and look at ways to address them, both at the pre-retirement stage and in retirement.

?Check our website: www.kpfinancialplanning.com.au or our Facebook page: www.facebook.com/kpfinancial for details of the next free retirement planning seminar.

Damien Roberts and GDKP Pty Ltd ABN 61 606 192 769, trading as KP Financial Planning, is an Authorised Representative (CAR 1237882 and AR. 333542) of Matrix Planning Solutions Limited ABN 45 087 470 200, AFSL and ACL No. 238256

This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication.