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Key retirement planning questions

Throughout working life, most people strive to increase their financial position through the building of assets and the reduction of debts. There are many paths that can be taken and everyone has their own preferences and objectives along the way.

Towards the end of this process, the question is usually; “how much savings is needed?”, because the only path taken to that point has been pushing towards the best net asset position (accumulating assets and paying off debt). So it does makes some sense to question whether that goal is in reach or not.

However, the real question that needs to be answered is; “how much income is needed?”, as the real outcome is the cessation of normal sources of income (employment salary or business income) and a move to live off income produced by the accumulated assets instead.

So, the real problems are more appropriately in the following order:
1. What kind of things do I want to do during my retirement?
2. How much will these things cost me?
3. When am I going to have these costs and for how long for?
4. What level of risk am I willing to take?

Once these kind of questions have been answered, then we can start to consider for you:
1. What structure is best suited for the assets we have accumulated?
2. What sources of income are appropriate considering the given risk tolerance? Are these fit for purpose for the time-frames given?
3. What savings can be achieved between now and retirement with just strategy (e.g. tax savings)?
4. Given all of the above, what asset position is required for retirement?

So despite it being often the first question asked, it is often the last consideration for the purposes of accurately finding out how to achieve the outcomes you want for your retirement.

At Mentor Financial Services we have advised many people going through this phase of their lives to ensure the right decisions are being made to aim for their desired retirement outcomes.