Sep 26, 2024  | Tags: retirement, psychology

Our insights

Having the right retirement mindset is something Australians find challenging.

Many are fixated on having enough money to retire comfortably.

It is difficult not to be.

Barely a week goes by where mainstream newspapers or morning TV shows are not highlighting the issue.

They throw up numbers about how much you need in superannuation by a particular age.

This feeds an unfortunate notion that prevails that we should scrimp and save every penny until the day we die.

This is far too simplistic and usually creates the wrong retirement mindset.

Retirement is not just a financial milestone and life transition but one that necessitates a polar shift in mindset as well.

It demands the transition from a saving to spending mentality, taking your foot off the financial brake, to enjoy a truly fulfilling retirement.

Here, we explain what your retirement mindset should look like, as part of the three key stages of successful retirement planning.

The accumulator mindset: Building wealth with purpose

This is the primary working stage of your life and runs until the age where you seriously begin to contemplate what retirement might look like.

The focus is on wealth accumulation achieved via saving, prudent investments and solid financial decisions.

The mindset is chiefly about discipline rather than reckless spending, as well as long-term planning.

But even at this stage, it is important to crystallise in your mind what your end game looks like.

Think about your ultimate goals, how much money you need for the retirement lifestyle you envisage and how you are going to get there.

This clarity will help provide your drive, determination and motivation to stay on course, ensuring your efforts align with your future needs.

Don’t allow your retirement strategy to become derailed by cognitive biases along the way.

Consider the following to ensure your plans remain on course:

• Set clear retirement goals and stick to the plan rigidly
• Educate yourself using multiple sources
• Seek multiple views from financial advisors, successful friends and family members
• Always base your decisions on hard evidence rather than opinions and emotions
• Remember you are playing the long game and don’t react to short-term fluctuations
• Diversify your investments across multiple asset classes, industries and markets
• Use automation to remove the need for constant decision making
• Get expert advice

The pre-retiree mindset: Preparing to transition

At this time, you are probably somewhere in your 50s or early 60s and thinking about when you will retire.

At this time, your mindset needs to segue from accumulation to preparation.

This is when you need to fine tune your retirement plans, checking that your savings and investments  are sufficient to deliver the goals you have set, making adjustments if necessary.

The emphasis should be on reducing risk, securing income streams and thinking realistically about retirement expenses.

Mitigating risk is critical.

Many people on the cusp of retirement lost more than 30 percent of their nest egg when the GFC hit in 2008.

But it is also crucial to begin shifting your thinking from that of a saver to that of a spender.

It might be harder to do than you think.

This doesn’t mean throwing caution to the wind and wasting money.

It means to start visualising your savings for the purpose they were created – a means of enjoying the retirement you have worked so hard for.

Think about how you plan to draw down on your assets while ensuring your plan is sustainable for the long term.

The retirement mindset: Embracing spending with confidence

Many people find this mindset the most difficult to embrace.

After years of disciplined saving, it’s time to switch into spending mode and enjoy the fruits of your labour without fear.

But it requires a level of confidence in your retirement plan, especially if your spending exceeds your income streams.

That is why a watertight, well structured financial plan is absolutely critical.

Many fear they will outlive their resources.

The reality is, the lion’s share of your spending should occur in the 5-10 years following your retirement when you hopefully remain fittest and healthiest.

You should be able to pull a tax free income from your super, say 10 percent, while leaving the balance to continue to grow.

This is also the time when you should consider to ‘SKI or not to SKI’.

SKI (Spending Kids’ Inheritance) is a very personal decision and one that is gaining in popularity.

Most people still wish to leave some kind of legacy to their heirs and with a carefully tailored retirement and succession plan, there should be enough money for everyone.

Get advice today

Your retirement strategy isn’t just about cold, hard numbers, it is about aligning your retirement goals with your life goals.

As you advance through the different stages of life, your mindset needs to adjust to support your changing goals.

This allows you to approach retirement prepared and with the utmost confidence, ensuring you not only preserve your wealth but enjoy the lifestyle you desire and hopefully leave a legacy as well.

The key takeaway is that retirement is not simply about “having enough money”.

It’s about having the right mindset to capitalise on your resources and make the most of your sunset years. 

If you need assistance in ensuring your retirement plan is on course, look no further than Calder Wealth Management.

CWM are experts in the business and have an envious pedigree in the industry spanning more than 50 years.

We are now planning the retirements of a third generation of South Australian families.

Our team of professionals can help you establish your retirement plan or ensure the strategy you already have in place is commensurate with your retirement goals.

We’ll work with you to devise investment strategies whatever your financial goals.

There really is no substitute for quality financial advice from a team personally invested in your wealth accumulation.

At CWM, we pride ourselves on leading our clients into the future with structure, financial stability and confidence. 

Written by Anthony Hill

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Taxation, legal and other matters referred to on this website are of a general nature only and are based on Calder Wealth Management’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

Calder Wealth specialises in wealth management with a focus on advice, investment, sustainability, insurance and finance.