This can provide important protection for someone who is focused on maximising their wealth at a specific retirement point in their mid-60’s. Retirees are often advised to shift to a more conservative asset allocation on approach to or at retirement, or, in the case of pension plans/products, part of the fund maybe automatically switched to safer investment 5-10 years out from retirement age. If you are in good health and plan to retire at age 65, you can expect to still have assets invested for a further 30 years, or potentially longer if your expectation is to pass some or all of these assets on as part of your estate. The most fundamental change that ensues is the need to reconsider the investment timeframe. This meant that people’s investment decisions effectively ceased on the day that they retired.Īs many clients today opt for the Approved Retirement Fund (ARF) route with their pension fund, they retain investment control of their pension assets throughout their retirement. When a person retired 20-30 years ago, they were usually either in a defined benefit pension scheme that paid them a set income for the rest of their lives or exchanged their pension fund for an annuity from a life insurance company, that replicated this arrangement. What really is your investment horizon?Ī key area we ask clients to consider is their investment horizon. Indeed, others continue to add value and maintain a smaller income potentially through providing consulting services or taking up directorship roles.Įven if you don’t have a clear plan on how your departure from the world of work will happen for you, it is worth thinking about it early, as there are strategic financial decisions associated with each, that are touched on below. Instead, many of our clients gradually reduce their workload over several years, with their income reducing over this period. Will you wake up on your 65th birthday having worked five (or more) days a week, never to work again in the future? This traditional approach is becoming far less common and is often not in keeping with how business owners or high-level executives would ideally like things to pan out. But alongside this, it is critically important to consider how you will stop working. We think it important for you to consider how you will live your life and fill your days when you retire, as this will ultimately impact your financial needs for the rest of your life. Our starting point in these cases is to ask the client to take a temporary step back, so that we can discuss some important considerations. Usually, we find that the question that is foremost in their minds is (quite understandably) around the growth of their assets between now and when they think they will retire –at around age 65, so they are in the best financial position at that point – often considered a key staging point. They often will have built up a substantial pension fund of €500,000 – €1,500,000, often in addition to other financial assets that they have accumulated. However, one of the questions that many of them have in common is how they should think about investing their pension funds and indeed their other assets, to meet their needs and objectives as they approach and begin to enjoy their later years.Ī scenario that we often come across is when a business owner comes to us seeking our investment advice. At Acuvest, we are lucky to be in the position of providing investment advice to a wide range of clients with different circumstances and needs.
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