In this financial planning column, Andró Griessel, CFP® and managing director of ProVérte Wealth & Risk Management, answers a reader’s question about drafting a retirement plan.
Q: I need someone to assist me with an investment strategy. My wife and I are both 37 years old this year. We are professionals with sufficient income levels to live comfortably and provide well for our two boys, ages four and one. We both started new jobs recently and we have some additional disposable income that we need to put away in addition to our employer pension fund contributions.
We don’t have other investments or capital besides a cash amount equivalent to our combined net salaries of roughly three months.
Could someone please assist in setting up a retirement plan for us?
A: Retirement planning is only one component of a holistic financial plan and although retirement has a higher probability than all the other risk areas (like the financial impact of the death of a spouse, the loss of income due to disability, incurring large medical bills due to sickness or accident or the financial implications of divorce), THIS is the area (barring maybe divorce) we find people being the worst prepared for.
Planning for retirement is much like planning a flight in a light aircraft from point A to point B. Before you embark on this journey you have to check if your aircraft is in a condition to make this trip, that you have enough fuel in your tank and what the weather conditions will be on your way.
This process can be compared to going to see a financial adviser and doing the maths or doing it yourself if you have the skills. This is not enough though… as you fly the plane en route to your destination, things might and will change. These things can be anything from weather to the mechanics of your aircraft and some of these changes might have life-changing implications. Planning for retirement is exactly the same. You have to constantly measure your progress and adjust your plan if the conditions or events require you to do so. Setting up a retirement plan is therefore in my view only the first couple of steps in a long journey.
I know I know… this is all a bit fluffy and I’m not answering your question. Unfortunately I don’t have enough information to assist you with the actual plan and would advise you to seek a long-term engagement with a competent adviser to assist you on this path. Because not all advisers are created equal, and the competency levels (and dare I say integrity levels) vary from extremely competent and professional to almost criminal, I will give you a couple of pointers from our experience.
Most important, monitor your progress at least once a year. Not checking your course or losing track of where you are can get you killed in aviation… it’s not much different in retirement planning.
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