Are You Prepared For Your Retirement?

Consider your long-term savings as a ship, sailing the uncharted waters of your ongoing career, bound for the distant port of retirement. How prepared is your pension for the voyage ahead?

All too often, I meet clients who have fallen into one of three traps.

The first common issue: There are those who have been given a boat but never really checked its seaworthiness. If you have a pension from a current or former employer, are you quite sure it is fit for purpose? How much income will you really receive? Where is it invested? How secure is the money promised to you? How safe is that promise. Personally, I would never set sail on a grand voyage without any clue as to who the captain is, if lifeboats are on board, how many icebergs might line the route and whether there are holes in the hull!

The second common issue: The jet-ski. I have met many people who believe they have ‘plenty of time’ before they need to worry about retirement. “It’s only a four day voyage, I don’t need to set off now.” They might say. Jet skis are great. They’re fun, exciting – and dangerous. If your voyage to retirement is blessed with calm waters and no obstacles on the way then your jet-ski might just take you there with minimum hassle and minimum investment. However, coming across a financial storm in the late stages of your career can easily sink a small, aggressive jet-ski pension or, just as worryingly, force you to delay your arrival in the safe haven of your retirement and work for many years longer than you planned.

The third problem I regularly encounter is the stand-by ticket. I have lost count of how many times I have been told that a client is expecting an inheritance to cover their retirement needs. So your parents have a ticket for a luxury cruise liner on the same route as you plan to take. Brilliant. Do you know they will die before they sail so that you can use that ticket? Perhaps you simply believe that they will give up their cabin for you anyway. They have saved their money for the journey so why shouldn’t you. You can’t share those seats. Buy your own.

So how do we build the ‘unsinkable’ pension?

Of course, we can never guarantee perfect conditions on the way but we can prepare for the worst and exploit the advantages we have.

Imagine first a huge aircraft carrier. Armoured, defended, nuclear-powered. Fast, strong, immense – and extremely expensive to build and maintain. If you have the funds to make sure that your pension pot can sail through ice-fields at 50 knots in a hurricane and carries squadrons of Top-Gun fighter pilots on deck to repel any attack, the chances are you are starting from a position of relative wealth.

In that case, don’t take the first boat you find. Seek the best advisor, the best structure, the best trustees, the best fund managers. Fit that ship out with all the top-rated kit and it will arrive on time and in good condition, regardless of what may come on the way.

Realistically, for most people, the Nimitz-class carrier is beyond the budget. The best route in this situation is the steady, safe, reliable one. The greatest asset we have is time. The earlier you set sail aboard that big, lumbering tanker with minimum luxury, experienced crew, over-cautious safety procedures and a 6-inch thick double hull, the more worry-free the your travel will be.

Ignore the jet-skis and don’t count on being given a ticket at the last minute. Nobody is ever going to pay you in your retirement unless you do something about it yourself. You might not think its urgent now but it with every passing day you are forcing yourself to rush that little bit more.

If you have plans in place, check up on them. Do some maintenance. If you don’t, then get on board and raise that anchor. It may be nice here on the beach before you set off but if your financial ship sinks on the way, that water will be very cold indeed.