One of the most common reasons clients come to see me is to make sure they will have enough money to fund their retirement. Once we have determined the client’s retirement goals (this is an article in itself), they generally fit into 1 of 3 broad categories.

The category you don’t want to be in is, “those who will not have enough to achieve their retirement goals”. The answer to this is compromise. Working longer or having less income in retirement or a combination of both. Most of our lives we have to make financial compromises and in retirement it is no different.

The middle category essentially is, “those who will have enough money to meet retirement goals if they focus on this goal and implement some strategies to increase wealth”. This generally involves directing a portion of their income for retirement, utilising technical strategies such as Transition to Retirement and salary sacrifice amongst other things.

The final category is, “those that are well on track to achieve their retirement goals and are going to have more than enough funds to meet these goals”. Clients in this situation are obviously in a great place, and this presents a different set of objectives for financial planners that are not often discussed.

The introduction of compulsory superannuation, coupled with a property boom has seen many clients accumulate wealth that was unusual less than a generation ago. This has led to many clients retiring with significantly more assets than they need to meet their requirements, no doubt a good thing. However, in order to achieve this, it is quite possible they have sacrificed more than they needed to build this wealth.

One luxury being in this position allows is to significantly reduce the risk associated with building retirement assets. We can reduce our exposure to growth assets such as shares and property that usually are more volatile than defensive assets.  We can also exit investment properties with a loan against them and are reliant on a single income source to remove interest rate risk. The focus can then be on much more stable investments.

The safer options will most likely result in less wealth at retirement, however, provide more certainty in the short term. This is a desirable outcome for many clients. Others are comfortable with risk and would prefer the higher balance.

The best news I have for clients that are already well on track is that we are able to direct some of their income or assets to achieving their other goals.   This could be something like, an improved ongoing lifestyle, a new car, an overseas holiday or something else fun!

Even if you think you are well on track to meet your retirement objectives, it is probably still worthwhile discussing your situation with an advisor as you may be overcommitting to the future at the expense of today!