Retirement can be a difficult and stressful time, but the guidance and expertise of a professional financial planner can ease the transition.

For many people, superannuation will be the single largest asset they will ever accumulate, not including their family home. Even so, there is understandable fear and trepidation among individuals as they near retirement about how long their savings will last, and whether they will be able to live the lifestyle they desire? Many approach their retirement feeling ill-prepared.

Fidelity’s ‘Value of Advice’ report, published earlier this year, revealed that almost two-thirds of people believe they are not particularly prepared for retirement, or not prepared at all.

More than half agree or strongly agree that they may need to work past their retirement age, that they’re not on track to have enough money for a retirement they can be happy with and that they may not be able to afford to live where they want to when they retire.

By the numbers

Retirement trepidation - As people near retirement:

55.0% - agree or strongly agree that they may need to work past their retirement age to fund their retirement.

53.5%  - don’t feel that they’re on track to have enough money for a retirement they can be happy with.

52.6% - fear they may not be able to afford to live where they want to when they retire.

Not surprisingly, approaching retirement is the number one trigger for people to see a financial planner.

Almost a third (31.7%) of those who currently receive advice, or who receive it as and when needed, nominated approaching retirement as the reason they sought advice. It is a greater trigger even than buying a property (23.1%), and significantly more likely to make people see a planner than coming into a substantial sum of money (9.8%). Around half of these people (46.7%) seek advice specifically to help them plan a better retirement, as distinct from the more general aims of help with investing (49.7%) and help with managing or growing wealth (43.6%).

It is therefore evident that having the right tools to help clients prepare for retirement, and navigate the shift into this stage of their lives, is key for planners.

Which of the following triggered you to first seek financial advice from a financial planner?

31.7%                  Approaching retirement

 23.1%                 Buying a property

 22.8%                 Recommendation from family, friends and/or colleagues

15.0%                  Economic/investment market downturn

12.3%                  Starting/growing a family

11.7%                  Career advancement

9.8%                    Coming into a substantial amount of money

9.8%                    Uncertainty about legislative changes

8.8%                    Redundancy

8.7%                    Health issues

As a growing number of people reach retirement age feeling poorly prepared for the transition, there is an opportunity for financial planners to really show their value. The Value of Advice report shows clearly why the role of the financial planner is absolutely critical. Planners not only help individuals address the technical aspects of retirement (for example, maximising accumulation capacity, or navigating Centrelink issues), but they also help address the intangible aspects of retirement, such as peace of mind and confidence that life in retirement is going to be OK.

We should not underestimate the opportunity for financial planners to improve the lives and wellbeing of Australians as they move from the relative certainty of working life to the perceived uncertainty of retirement. But we should also understand that while retirement for everyone may bear some superficial similarities, the experience is different for each individual.

How we relate to money, our expectations of retirement and how we plan to get there may vary widely from one person to the next – and as we shall see, planners need to meet each client’s needs in the way that best suits that client.

At a high level all retirees share some obvious needs and circumstances. Anyone moving into retirement wants to feel confident that they’re in control during this period of potentially significant change. They want peace of mind, knowing that they are on track through what may seem to be unpredictable or uncertain circumstances. They do not want to lose their self-identity. They seek purpose and want to feel that they belong to a community and remain connected with society although they do not contribute to the society as active labour.

However, retirees have their own interpretation of these high-level needs based on their personal circumstances. Their personality, level of financial literacy and prior experience affects how they approach their financial affairs and will influence how they feel about moving into retirement.

This means that financial planners have to take into account all these individual circumstances and be aware of a range of investment solutions in order to address their clients’ needs.

Considerations will include how financially literate a client is, and how well they will grasp the strategies presented. Some clients need significant hand-holding and want frequent contact, while others are happy for a looser relationship and an annual check-up. Some may thrive on the financial elegance of a solution developed on their behalf, while others may shudder at the first hint of complexity.

Commonly used retirement investing strategies include maintaining the same strategy used by the client to accumulate retirement savings; transitioning to a more conservative investment strategy as retirement nears; income ‘bucketing’ to varying degrees of sophistication; and income layering. It is unlikely that any one of these strategies will serve all clients equally well, and that’s why its important to see a qualified planner to develop a strategy for your own unique needs.