In my role as a financial adviser I meet many clients who are looking forward to the freedom retirement can bring. They are aspiring to travel around Australia or around the world, help out with raising their grandchildren or pursue passion projects such as working at an NGO.
However, one key theme that underpins most questions, concerns and discussions that I have handled, and continue to handle with clients: is whether or not they will have achieved enough financially to be able to take their planned next steps.
I term this “retirement anxiety”.
By this, I mean that ‘middle-of-the night’ worry that many people experience when they think about what happens after the last pay cheque comes in. It occurs when people don’t know what they can expect financially in retirement and often expect the worst.
In my experience, there are two main factors driving these worries:
- Media reporting. The financial press regularly reports on very large, unattainable figures that are ‘required’ before retirement is possible. In many cases the figures quoted are far greater than most people will actually need. Unfortunately, these figures are frequently quoted by finance professionals which can often led to ordinary people becoming disillusioned and disengaged with their finances.
- Over-complication of the superannuation industry which has made people’s ability to predict their retirement benefit too challenging meaning they worry about the unknown.
In combination, these two factors create the perfect ‘retirement anxiety’ environment.
Fortunately, there is a very effective solution to this issue. A well-executed Superannuation Health Check can provide you with a retirement road map which will show you how much your benefit will be at your preferred retirement age. It can also provide you with annual checkpoints to compare against each year to see how you are travelling compared to the road map.
PSS defined benefit members are very fortunate because your retirement outcome is dependent on two key variables: your Final Average Salary (FAS) and your Accrued Benefit Multiple (ABM). These are both readily identifiable and also relatively easy to project with a high degree of certainty.
Importantly a Superannuation Health Check will allow you to consider any key inputs that you are able to manipulate to adjust that trajectory, including increased contributions or higher duties.
Once you have determined your final retirement benefit, a Superannuation Health Check will also enable you to determine your likely pension income which you can then compare directly back to your current income.
Rather than not knowing what to expect financially in retirement, you will know exactly what to expect in retirement. If the road map takes you somewhere you don’t want to go, then you can take steps sooner rather than later to alter both the road and ultimately the destination.
In my experience, this service provides an instant cure for retirement anxiety.
I have seen first-hand many times that the development of a roadmap to retirement and the removal of retirement anxiety from one’s life is one of the most powerful investments you can make in your wellbeing.
It is genuinely life changing.
For more information about getting a PSS Health Check click here.