THE STAGGERING AMOUNT OF WEALTH NEEDED FOR A COMFORTABLE RETIREMENT.

"The cost of a comfortable retirement is on the rise. So says The Association of Superannuation Funds of Australia, who has revealed that the amount needed to retire has spiked by almost 4 per cent."

What a shock ... not!

I quote the following directly from a recent 7NEWS article [read here] ...

"The staggering number of savings needed to retire has been revealed, with the cost of retirement rising by almost 4 per cent over the past year."

Let's look more closely at this. Specifically from the viewpoint of a Mortgage Broking business owner. All Mortgage Brokers share (or should share) the core objective of not only obtaining a suitable home loan deal for their clients, but equally importantly, guiding them on their journey of wealth creation towards a comfortable retirement.

The figures quoted in the article fall well short of reality in my opinion. Not sure how an active couple wishing to travel and enjoy life would get by on these numbers. Nonetheless the point being that the majority of people will struggle to meet even this amount.

Yet how much time and effort do you, the business owner, put towards your own exit planning, whether that be for your next adventure, a new business, or semi or full retirement?

It's one thing to consider the wealth creation needs of your clients, which all good mortgage brokers do, but what a lot of mortgage broker business owners haven't necessarily done a great job of is working out their own wealth gap. And in this context, we'll define that wealth gap as the difference between the amount of wealth you'll need at a potential point in the future, if that's full or semi retirement, to exit your business, to generate the income you need and contribute money towards various causes or, purposes and the amount of wealth you have now trapped in your business.

For example, if you work out that you need an income of $250,000 a year post retirement, that means if we follow the rule of four, which is a long term average of a 4% return, you'd need $10million invested to generate $250,000.

Now, let's say you get an assessment of your business value now and your business is worth a million dollars. Lets say you have a few other assets outside your business, but they're not necessarily income generating.

So we look at that and go, okay, let's say you've got a $2 million property portfolio, a million dollars current value in your trail book or business, and you need $10million. So your wealth gap is $7million, which you need to make up through value creation in your business.

So this is really what's important here. The takeaway is mortgage brokering business owners are facing a significant wealth gap that is rushing headlong towards them.

So take some time to sit down, have a think about all of the things that you would like to be doing in your next act in life, whether that's retirement or going into another business. There's the amount of money that you need to pay taxes and capital gains etc..., the amount of money you need to pay off debt, those sorts of things.

Then there's the amount of money that you might want to put towards other passions and preferences and causes. Charity, a social cause, some sort of health research.

I was talking to a friend of mine fairly recently, who lost a his mother to ovarian cancer and he has a real passion for ovarian cancer research and wants to contribute a significant amount of money which he doesn't currently have. So that's a real passion.

So you need to factor in all of these things that you might like to do in your next act in life, whilst at the same time making sure that there's still enough left over to put into income earning assets at an average of 4% to see you through at least another 20 or 30 years of life.

Then you get to work on establishing your current wealth position and the actions and steps and execution plan that is required to close that gap. This is the area that we at RECLUDO specialize in. We call it our Value Acceleration Methodology.

Do you know your potential busin ess value and importantly your potential gaps? I invite you as a Mortgage or Finance Broking business owner to get in touch and take our free 15 minute Value Assesment process. You can book a call with us here [Discovery Call]

Author -Ash "I'm in the business of accelerating value creation for Mortgage and Finance Brokers" PLAYSTED