Alan Dick CFPTM and CISI FP Professional Forum Chair comments on HSBC global retirement report

by Lora Benson | Jan 27, 2016

Alan Dick CFPTM (Certified Financial Planner) and Chairman of the CISI Financial Planning Professional Forum said:

“The HSBC global retirement report seems to show that a significant majority of us might be in the wrong jobs as 65% of pre-retirees want to give up working within 5 years if their circumstances would allow. Frighteningly, nearly 1 in 5 seem to be worried that they will never be able to afford to retire.

“Do people really know how much money they will need to enjoy the lifestyle they want throughout retirement? I am not talking about a rough rule of thumb but rather an estimate of the actual cost of the desired lifestyle, taking account of inflation and life expectancy and building in some margin for error. As human beings we are naturally scared by the unknown. If you don’t know how much your retirement is likely to cost it is natural to assume the worst. The only way to find out and relieve the stress of the unknown is to carry out a proper financial plan (including a lifetime cashflow forecast).  A suitably qualified financial planner (CFPTM  or Certified Financial Planner) should be able to help people work through the issues and arrive at a reasoned assessment of their own progress towards retirement.

“Changing life expectancy along with the death of the company sponsored final salary pension scheme means that individuals need to take control of their own financial planning and they need to do it early in life. Unfortunately, there are obviously competing financial considerations earlier in life as people tend not to earn much as the start of their careers, while needing to fund immediate needs like food and housing and possibly raising a family.

“The role of a good financial planner is to help people make difficult and complex decisions about balancing priorities and to understand the implications of these decisions. Often the solution may require taking some unpleasant medicine today for a healthier financial future. Most people need help and reassurance that the long term gain will be worth the short term pain.

“Many people in the HSBC survey pointed to a desire to travel more, pursue other interests and spend more time with friends and family. While this is not surprising, it does raise the question of whether working your fingers to the bone in the commercial rat race, to allow you to retire earlier because you are stressed and burnt out, is the best approach? We all know stories of people that worked their whole life to enjoy retirement, then died within weeks of stopping work.

“For many it may be better to change their work-life balance early in life and enjoy more travel and time with family etc throughout their lives, even if it means working longer as a result. It might be better to work part-time until age 70, rather than killing yourself with stress trying to fund retirement at 50. A carefully constructed financial plan, built on reasonable assumptions, should help people put those kinds of difficult decisions in context and let them make informed, empowered choices today.

“It’s also interesting to note that, while workers in the UK are very high up the list of those desperate to retire, we are not alone!”