Paul Clitheroe
Paul Clitheroe

Planning is vital for retirement - don't leave it to chance

THE global financial crisis (GFC) hit many investors pretty hard - but none more so than retirees, according to HSBC's latest Future of Retirement report. The report is based on responses from 16,000 people across 15 countries including Australia, and its findings should sound a warning bell for anyone approaching retirement.

According to the HSBC survey, 79% of Australian retirees say their income fell upon retiring, with around four out of ten (41%) saying their income dropped by half.

Among retirees who experienced a fall in income, 59% blame the GFC for the cash squeeze. Other respondents pointed to unexpected events or expenses like adult kids moving back in to the family home or health-related costs.

Interestingly, one in three (32%) retirees who experienced a fall in income after leaving the workforce blamed insufficient planning. This alarming statistic highlights the need for all of us to lay foundations for retirement - a period of life that could last for 10, 20, maybe 30 years. It's just too long a timeframe to take a "she'll be right" approach to, and leave to chance.

There's no doubt the investment portfolios of many retirees were seriously knocked around by the GFC, especially those who had a substantial investment in sharemarkets, which experienced a disastrous run during late 2007/early 2008. Nonetheless if you retire at age 65, you could live for another two decades, and it's almost certain that during this time asset markets will rise, and fall, possibly in several different cycles.

The key to navigating the challenges posed by fluctuating asset markets and unpredictable life events is sensible financial planning. We all have different needs and expectations in retirement, and a good, properly qualified financial planner can offer a tailored strategy that will give you the benefit of regular income, the potential to earn capital gains, and the reassurance of a savings buffer to offer protection against the unexpected.

If you haven't already formed a partnership with a financial planner, ask friends or family for a referral or contact the Financial Planning Association (

The money side of things is just one aspect to consider if you're getting ready to wind down your working life. As a period of significant change, there are plenty of other issues to think about and prepare for, and accessing accurate information is important.

To help retirees make the adjustment, the Human Rights Commission has published a guide titled 'Your Rights at Retirement'. It covers topics like carer's benefits, senior's cards, and even extends to subjects like re-skilling and employment support for those who are looking to shift down a gear and work part time before giving up work altogether. It also features a section on financial planning, something that is definitely worth a look.

You can download the guide for free from the Human Rights Commission website. Or for more ideas on planning for retirement check out my book Making Money.

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

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