How to plan to not retire

The idea of a formal retirement at age 65, followed by a sedentary life of golf and gardening, is becoming less appealing to many people.

Nearly half of all US baby boomers still working do not expect to retire until they are 66 or older, and 10% predict they will never retire.

While some will continue working because they need the money, the majority want to continue working because they enjoy it.

This retirement fluidity can make saving for retirement somewhat challenging.

How do you stay motivated to save for the future if you don’t plan to retire?

Developing a non-retirement plan

Regardless of whether you intend to stop working, work part-time or continue working throughout your life, a retirement plan remains an essential, albeit fluid, document for several sound reasons:

• There are significant tax advantages to saving through retirement funds, with investors permitted to save up to R350,000 per year on a tax-deductible basis.
• As one accumulates assets, the need for risk cover reduces and ultimately falls away, and this should be reviewed regularly to avoid paying for cover you no longer need.
• Healthcare expenses tend to increase as one gets older and it is advisable to review your plan option every year.
• It remains advisable to review and rebalance your investment portfolio at least once a year to ensure that it remains appropriate in respect of risk, returns and your investment horizon.
• It makes sense to carefully manage your various income streams to ensure that you are drawing in the most tax-efficient manner and that your future cash-flow is secured.
• As circumstances change, for example the birth of grandchildren or the death of a spouse, it may be necessary to review and revise your will.
• For many retirees it makes sense to include their adult children in their retirement planning, especially where family money and assets are intertwined.
• An important part of estate planning for business owners is to ensure that their businesses can continue to operate in the event of their deaths. A business succession should naturally be reviewed and updated regularly.
• Unexpected events such as retrenchment and illness can happen and these need to be planned for. Similarly, many retirees change direction multiple times in this life stage which, in turn, will necessitate a review of one’s retirement plan.
• As adult children leave home, many retirees choose to downscale their family home in exchange for something smaller and easier to maintain. The selling of immoveable property will naturally pre-empt an updated retirement plan.

Every person’s vision of retirement may be different, and yet all dreams are underpinned by the same common denominator: the freedom to choose.

Financial freedom is about having enough accumulated wealth to choose what you want to do with the rest of your life. Your retirement capital buys you freedom to spend your time on your terms.

Eric Jordaan is a director at Crue Invest

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