If you ask pre-retirees what they worry about most when it comes to their finances, the answer is always the same: making the money last. That’s right, the biggest concern of pre-retirees is running out of money in retirement.

The financial services industry calls it ‘longevity risk’, and the super funds are scrambling to implement solutions to manage it.  You see, the super funds have a legal requirement to implement a retirement strategy for their members.  The strategy must address longevity risk, but also keep some money available for access when needed.

An impossible task

Inevitably their solutions will be product based, with perhaps some transactional advice provided to get their members into the products in the first place. 

But in time we will see that product solutions are not the answer.  To cater for the changing needs of members, the products would be so structured and complex to be beyond the administrative capabilities of super trustees.  Keep in mind structured and complex products that trustees couldn’t understand were behind the Global Financial Crisis.

Continuous planning cycle

Active financial advice from a professional is the key to making the money last over the course of retirement.

Progressive super funds are already engaging third-party advisers to help their members in retirement. It makes sense because they can’t do it with their in-house advisers.  They just don’t have enough of them. 

It's not their fault.  The financial planning industry has practically halved in size in the past four years, and the remaining advisers are taking control of their careers and choosing self-employment.

There’s nothing new under the sun

Retirement planning is not a set and forget exercise.  Things change, both positively and negatively, and it’s important your finances are resilient.  The idea is captured well in the 1960s folk song “Turn! Turn! Turn!”. Its lyrics were written around 3000 years ago; they’re verses from the biblical Book of Ecclesiastes. According to the song, there will be times to laugh and times to weep; times to plant and times to reap; times to dance and times to mourn. There’s “a time for every purpose”, as the song goes. You just need to recognise where you’re at and accept it.

It’s ageless advice. And retirees get it. Retirees know that they’re going to be retired for a long time, and that they can’t possibly foresee the challenges they will face. They know that there will be moments when they will need to draw down capital, and maybe even opportunities to inject capital. Occasionally they will need to dial up or dial down their regular payments to make ends meet.

At When Financial Solutions, we know that retirees are willing to be flexible because over the course of our careers, we have helped thousands of them. The fact is most retirees can differentiate between their discretionary wants and their essential needs. Further, they’re willing to act when things go off track, and cut back on expenditure if required.

And that’s why clients of When Financial Solutions don’t require structured, heavily engineered retirement products. With us by your side re-visiting things from time to time, you won’t worry about running out. 

We'll give you spending confidence. It’s not a matter of ‘if’ but ‘when’.

This article is general and does not consider your personal circumstances so it may not be appropriate to you.  If you would like advice specific to you, please give us a call.