Retirement Planning – Learning from experience

It is no secret that retirement is more successful for some than for others. One of the secrets to success is planning that begins decades earlier. Here we speak with a 67-year‑old who has begun his (semi) retirement with style and hear his real-life tips on how to make your retirement dreams happen.

Ewan Brown couldn’t be happier with his retirement, partly because he is not yet fully retired. The 67-year-old Canberran knows that in order to have a full life he must remain active in a number of pursuits, including work, fitness and family. So he makes sure, through both paid and volunteer positions, that he is working two to three days a week. Any more and his lifestyle suffers. Any less and he risks losing his sense of self.

The most powerful tool Ewan has in his retirement is choice, which is a benefit of being actively and passionately involved in his superannuation planning with his Financial Adviser from his 40s onwards. Some knowledge and training in economics and accounting didn’t go astray, but the basics that brought him financial independence, including tax-effective investing and understanding where your money is placed and how it is performing (the type of insights your Financial Adviser offers you), were exactly that – simple basics.

So Ewan is able to cherry-pick jobs and volunteer roles and decide what suits him. He is able to say how much time he would like to spend working and how much he needs to keep free for his favourite hobby – fishing. And if a particular job doesn’t meet his expectations, which was the case with a recent role, then he has the freedom to search for a new one.

His latest role is a Directorship with the Council on the Ageing ACT (COTA ACT), an industry body representing the interests of older people in the ACT. This gives Ewan the opportunity to spread the word about planning a happy, healthy and wealthy retirement. Ewan has shared some of his learnings for different age groups with us.

Accumulating wealth: 40 to 49 years

At this stage of life, Ewan says, you are likely at the peak of your earning capacity, so your mortgage is less of a drag on your income. It is during this stage of life that an individual or couple finally feels a little wealthier than ever before. Deciding on what to do with this extra wealth, he says, is key to success later in life.

“It is very important at this stage to resist the temptation to overspend, rather than to save,” Ewan says. “You’re likely reaching a cusp with some of your debts, so it’s important to start ramping up your saving capacity. The tendency is usually to spend because you’re finding you have better cash flow. But this is the perfect time to start making use of the tax system by looking at the benefits of superannuation and salary sacrificing etc. with your Financial Adviser. Finding out what investment methods are available to you that are tax-effective is the first step in planning for your retirement.”

At the same time as seeking professional advice and being disciplined with your savings, doesn’t mean living a life without enjoyment. Ewan regularly rewarded himself with holidays and nights out at restaurants. It is during this time of life that you should begin to properly picture the lifestyle you would like to have in retirement, and if you don’t have an enjoyable lifestyle now, it will be difficult to imagine a retirement that includes little luxuries.

“While you do have to find that balance and be steeled to making saving a part of your life, don’t be afraid to then take advantage of your current situation, rather than saying, ‘I’m going to leave it all to my retirement’,” he recommends. “A lot of people who do that never achieve anything. They never get to realise their goals because they fail to set themselves up for a retirement lifestyle.”

Ewan says that during this period he always had some form of personal insurance – particularly when it also offered tax benefits – to protect his retirement strategy from unforeseen events.

Before retiring: 50 to 65 years

It was early in this stage of life that Ewan and his partner began planning the physical side of their retirement. They designed and built a house that was shaped around their life together as they aged, rather than one that included children at home.

“This was a deliberate action, to design and build a home that was suitable for a couple,” Ewan says. “We didn’t want a “McMansion”, we wanted a place for retirement. And we don’t see it as our forever home, there is knowledge that there will have to be another move as we age, but it certainly suits our purposes during the first stage of our retirement.”

Planning your retirement in the amount of detail that it deserves, he says, can take up to five years to achieve. Far better to do this before retirement begins and with the assistance of a professional Financial Adviser.

“I starting doing things that other people would usually put off until retirement, such as tidying up all of my finances, documenting important information, knowing what you’ve got and making sure there is adequate insurance coverage, starting new hobbies etc.,” Ewan says.

“I had heard a lot of people say, ‘I’ll get around to that when I retire’, then when they retired they were so busy doing the little things that they couldn’t organise or enjoy any of the big things. People then experience less choice and, they tell me, they lose their identity during the early stages of retirement. They feel they no longer have a purpose. But if you retire on your own terms and under your own control, then you hold on to your sense of importance.”

Retiring: Over 65 years

Planning does not end once retirement begins. Ewan says retirement is a series of steps and must be planned as such. Consider that your life will be lived in five-year stages, he recommends. Figure out what each is likely to look like, or what you’d like it to look like, and prepare accordingly working closely with your Financial Adviser.

Outside of work and volunteer roles, one of Ewan’s highest priorities is fitness. He runs and visits the gym, and says staying active is vital to the enjoyment of retirement, particularly its early stages. The first five to ten years of retirement are typically the ones with all of the travel and adventure, he says. After that things tend to slow down.

“After the first ten years retirement activity and expenses begin phasing off as we move through other stages until we’re looking at advanced life-care planning and what sort of nursing homes we’d like to go into,” he says. Once again the benefit of advance planning and being familiar with the lay of the land comes to the fore.

Most important, Ewan says, is to never stop doing things. “Volunteer in the community, keep learning and stay fit and active,” he says. “Don’t stop work immediately, it is too much of a jolt. Build networks, make contacts and always keep an eye on the future in case something new comes up.”

“The baby boomers were brought up to think we were owed a great retirement. That is not correct. You have to work at retirement to make it fulfilling.”