Preparing for retirement isn't just about money

Preparing for retirement isn't just about money

If it isn't only about the size of your pension pot, though, what is it really about? Moving from full-time employment into retirement is one of the biggest transitions in life, and it's one you need to start thinking about long before the day you plan to stop working.

In this video, author and financial educator Barry LaValley, who specialises in preparing people for retirement, explains why this stage of life demands far more than financial planning alone. He recommends ramping up your preparation in stages, starting around ten years out, then five, then one, so that by the time you reach this new chapter you have a clear picture of the possibilities and opportunities ahead.

You'll learn why one of the most common mistakes people make in the run-up to retirement is focusing almost entirely on making sure they have enough money, while neglecting the more important question of what they actually want to do with the rest of their lives. LaValley challenges the idea of retirement as a "golden handshake" or a pot of gold at the end of the rainbow. Drawing on the Japanese concept of "second life," he describes retirement not as a permanent holiday or a thirty-year weekend, but as a chance to find balance, pursue lifelong goals and live with genuine purpose. It's simply life, but life on your own terms.

You'll also learn why the kind of professional support you need changes at this stage. Rather than a conventional financial adviser, LaValley argues, what many people need is an educator, mentor, catalyst and coach, someone who helps you move forward and actually do the things you want to do. In his view, the adviser's role at this point may be more important than at any other time in a client's life.

The takeaway: retirement is an exciting opportunity full of possibility, but realising it takes serious deliberation. Start that process sooner rather than later, and think as carefully about how you'll spend your time and find meaning as you do about your money.

Chapters / Key points

• Why retirement is one of life's biggest transitions
• Why you should start preparing ten, five and one year out
• The common mistake of focusing only on money
• Why what you'll do with your time matters just as much
• Rethinking retirement: beyond the "golden handshake"
• The Japanese idea of "second life" and living with purpose
• Why retirement is life on your own terms, not a permanent holiday
• Why you need an educator and coach, not just a financial adviser
• Why an adviser's role may matter most at this stage of life

Transcript

Preparing for retirement isn't just about money

RP: Moving from full-time employment to retirement is a huge transition. You need to start thinking about it long before you plan to retire.

Barry LaValley is an author and financial educator who specialises in preparing for retirement.

BL: If we want to just focus it on when you plan to leave the paid workplace, and go off and do things that you want to do, then I would say within 10 years of that, and then 5 years, and then 1 year, and you just ramp it up. So that by the time you are ready to move into whatever you call this new period of life, you have a pretty good idea of what the possibilities and opportunities are.

RP: A common mistake that people make in the run-up to retirement is focusing too much of their attention on ensuring they have enough money. It's even more important to think about what you really want to do with the rest of your life.

BL: We still have this idea that retirement is the golden handshake, the pot at the end of the rainbow. And it's not. The Japanese call it "second life," and all that means is that you get to a point in your life where it's life balance as opposed to lopsided leisure, achieving lifelong goals as opposed to just purely having fun. It's about focusing on the things that are important to you, by first identifying what those are. It's about living a life of purpose.

I could go on and on and on about all of these things that it brings up the potential to be. But it is not a 30-year-long weekend, it's not a permanent vacation, it's not bells and whistles and sky rockets. It's just life. But it's life on your terms.

RP: If you're approaching retirement and don't yet use a financial planner, there is a very strong case for hiring one. But remember, at this stage of life, it's not really a conventional financial adviser that you are looking for.

BL: I'm not sure at this point in our lives it's an adviser that we need, as much as an educator, a mentor for some who need it, a catalyst and a coach. So the role changes, because the adviser becomes a more important part of a client's life, in just helping the client move forward to do the things the client wants to do. So I see the adviser's role to be probably more important than at any other time in a client's life.

RP: Retirement is an exciting opportunity. There are all sorts of things that you might want to do. But it requires serious deliberation. And you should start that process sooner rather than later.