Have you ever gone through a major life event that forced you to start again? For some, it’s a scary time filled with change, anxiety and confusion. But it doesn’t have to be that way. You’re human and starting over is not something you have to do alone. That’s what bouncing back is all about.
How you deal with change will determine your ability to tackle what life throws at you. Bouncing back enables you to have a vision of your future, to look at what you have today, to determine the change you need to improve your situation, and to figure out what else you need to have the retirement of your dream.
Do you have a plan for the next stage of your life: your retirement?
In this blog post, you’ll learn about:
- The biggest issues affecting our financial and emotional well-being after a major life event;
- How to plan for a stable and secure retirement from age 60; and
- How you can rebuild your life and why you should look forward to it.
Issues affecting our financial and emotional well-being after a loss
Grieving a life partner is a reality of growing older. It’s ok to feel scared, frustrated and confused. It takes time but you can take comfort in knowing you’re not alone in feeling overwhelmed with everything and getting used to change. Life isn’t always “sunshine and rainbows”. It can be difficult. It can break you if you allow it. But, having a plan for your future and having someone to guide you will make the journey to retirement way easier.
2 years ago, I met with a new client, Miranda who lost her husband to cancer 12 months prior. He was sick for 18 months and she nursed him. His passing was expected but it still shook her. When Miranda lost her husband she also experienced a loss of identity. This was not what they had planned.
While he was still alive, they felt they had a purpose and had their own “roles”. He looked after the finances and was a savvy investor. Miranda took care of the children and managed the household.
The house was paid off. Her 4 adult children had lives of their own. Her late husband left a sizeable portfolio of in excess of $1 million worth of shares, managed funds and term deposits.
Miranda admitted that she had difficulty understanding how much income to withdraw from her investments to meet her expenses. When she needed to repay her credit card, she drew money from her investments without thinking about the tax consequences.
Now, having to do things for herself, she worried if she was doing things right. While she had $1 million in investment assets, she remained fearful of running out of money. She’s family-oriented so she wanted to make sure she can provide financial support for her children and their families, while also living a good lifestyle. Emotionally, she wanted to know if she can cope with starting over from age 60 and where should she begin.
Miranda was a naturally conservative person. She felt shares were risky and complicated and added to her confusion. Her overall portfolio does not reflect her risk tolerance and kept her up at night. Based on answers to our questions, Miranda is a Conservative investor and her portfolio is more suitable for a more aggressive Growth investor. Overall, her portfolio does not reflect her profile and long-term needs.
As a retiree with no other source of income, her assets must generate sufficient earnings to provide her with an income to live on and enough capital growth to keep up with inflation.
Miranda needed a complete restructure of her portfolio, including reducing her number of shares, increasing her fixed-income assets and reducing her cash holdings. We worked together to set a target return, allocated assets according to Miranda’s objective and risk tolerance, then selected appropriate products, and measured the progress against a suitable benchmark. A secure retirement plan is more than just savings, it’s about generating income too.
Planning for security and stability from age 60
Finances were the last on her list of things to worry about after losing a loved one, but Miranda still needs to plan how she’ll live her life over the next 25 years or so. In a nutshell, these were the steps we took to plan for her future:
- Envisioned her retirement. Miranda needed to create a mental image of her desired outcome – how she wanted to live and what she wanted to do.
- Reviewed her current situation. It’s important to take a look at where she is today, she can’t get anywhere without first acknowledging and knowing where the starting line is. This included taking stock of what she had in her portfolio.
- Calculated her retirement needs. Now that she knew where she was and where she wanted to go, it was time to determine her spending needs. This is crucial to know if she was on track for retirement or if she needed to make some additional moves and changes to improve her situation. For more information, you can visit the ASFA Retirement Standard which benchmarks the annual budget to fund either a modest or comfortable standard of living in retirement.
- Reviewed her income sources. Now that she had examined her income needs in retirement, she was able to figure out if she will have an adequate retirement income stream.
Rebuild and bounce back
12 months after our meeting, Miranda is in a much better place and it’s only getting better. She had transitioned from confused to confident, overwhelmed to independent. I get excited when I talk with clients who I know I can help. That’s what it’s all about.
After a major setback, it’s easy to lose confidence. The adage ‘if you look good, you feel good’ applies here. Simply smiling and standing up straight can make an impact in your day and outlook. Our emotions follow our actions, so if you put more effort into how you look, you will feel more confident.
Here are a few tips on how to bounce back from a personal loss:
- Welcome your emotions
- Embrace the wonderful
- Look towards the future
- Take comfort in knowing you’re not alone
- Keep moving
- Enjoy the moment
At the beginning of this post, I asked, “Do you have a plan for the next stage of your life: your retirement?” Maybe you’re on track. Or maybe you don’t want to think that far ahead. Fortunately, you’re not starting over from 25, so you have more knowledge and experience now.
It’s never too late to start planning. You’re never too old to start something new. What’s vital is you need to identify what’s important to you and focus your time and energy into those things. Start today to plan and live well.
Are you trying to bounce back from a difficult experience just like Miranda? Reach out to the Centaur Financial team and let’s see what we can do to help.
 Not her real name
As always, if you would like to discuss the contents of this newsletter please give us a call 07 5559 5760.