Weathering Storms: Building Financial Resilience for Retirement

The notion of financial resilience is popular now and during any period of uncertainty. Many investors assess whether they should make a dash for the exit or change their plans in some way. Yet securing wealth for your retirement requires that you are ready to cope with short-term shocks and prepared to achieve long-term fortitude.

Overcoming inaction is our choice

 

Financial markets may appear to be quite volatile over the short term – say, weekly or monthly – but there is not much you can do about these fluctuations, and you shouldn’t worry too much about the persistent rumble of investment noise. Markets have historically recovered from even severe shocks and while the duration of any recovery may differ, there are no signs this tendency is set to change.

 

Yet you can take steps to feel better about your circumstances. Even in the short term you can embed resilience, and create a long-lasting effect for your finances with a number of sensible planning steps and considerations. While various attributes of our behaviour such as inertia conspire to prevent us from being proactive, we are rewarded when we overcome these constraints.

 

We have choices – and the investment and financial planning choices we make throughout our lives significantly affect our financial outcome in retirement. 

 

Effective money management

 

Even those who are fortunate enough to be comfortably off will benefit from assigning their funds wisely.

 

Many of our clients find our Three Pot Theory™ useful when conceptualising and managing their funds, including for seemingly basic (but crucial) provisions such as paying off bills and having an emergency fund.

 

Saving for long-term goals can be well served by a core and satellite approach

 

 

When we talk about effective money management we also often highlight a number of other factors – what we call the ‘controllables’ – because these are within your control and can also make a considerable difference before and during retirement.

 

These attributes you can influence and include what you pay in fees, staying invested, diversifying your assets and using tax wrappers. You can choose to ignore these factors if you wish, but taking these lessons into account could ensure you have a much more comfortable retirement than otherwise might be the case.

 

Even just taking one of these factors as an example – what you pay in fees before and during retirement – could mean more than £600,000 extra for you and your family. This article shows the calculations, through the difference in just 1% in fees over 30 years.

 

Expert advice in your corner, and guidance at your fingertips

 

By effectively managing your money, you can make clear inroads towards optimising your wealth for the long term. Yet you can and should do more, because embedding deep resilience generally requires objectivity beyond your typical sources of influence.   

 

You can start by capturing a clearer picture of how long your money could last under different circumstances. Netwealth’s creative planning tools, for example, can help you to model various scenarios to see if your planned contributions could help you to reach your goals. You can change variables such as tax rates, risk level, contributions and withdrawals to create a useful impression of how your finances could unfold. 

 

But there will likely come a time when you benefit from a more specific level of insight and nuance. You may want a qualified adviser on hand to discuss the impact of tax changes. You may need a sharp analysis of complex pension rules. You may need to build a fortress to counter the effects of inflation and seek sensible ways to assign capital both in and outside of tax wrappers.

 

You may simply want impartial reassurance you are still on track.

 

As professional wealth managers, we make investment decisions and navigate markets on your behalf. We summon our experience to assess the best ways to ensure your wealth lasts.

 

If you would like to know how we can help you, we encourage you to get in touch. Because while making money over your lifetime can be a demanding effort in itself, making it last in retirement often requires considerable forethought and tenacity.

 

You could be well served by having a reliable partner in that endeavour.

 

 

Please note, the value of your investments can go down as well as up.

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