Determining retirement goals is undoubtedly at the core of most personal financial plans.
Ideally, the setting of at least broad retirement goals should begin early in our working lives – and then continue to be refined as we age and gain a better impression of our likely future retirement finances.
The rapid ageing of the population should act as one of the numerous prompts to determine and periodically review our retirement goals.
As Smart Investing discussed earlier this month, the recently-published report Vanguard’s roadmap to financial security: A framework for decision-making in retirement proposes a retirement plan that best aligns with retirees’ achieving their goals while mitigating their risks.
This plan has four parts: Determine your retirement goals, understand your risks, assess your financial resources and, finally develop a plan to achieve your goals and mitigate your risks. Over coming weeks, Smart Investing will take a closer look at each of these elements, beginning with determining your retirement goals.
“To achieve financial security,” the report comments, “investors must first establish and prioritise their unique goals for retirement. This provides them with a starting point for the planning process, from which they can then determine the appropriate allocation of resources toward meeting these goals and the potential risks that can derail them.”
Common goals of retirees include:
When setting your goals, consider reading the ASFA retirement standard report, published by the Association of Superannuation Funds of Australia. It provides a guide to the income needed for retirees to have what are termed as “adequate” or “comfortable” lifestyles. And an accompanying retirement budget report lists the types of expenses that retirees are likely to face.
Once your goals are listed, you can then decide which matter most to you. The setting of goals could be described as the backbone of sound retirement planning.
Written by Robin Bowerman
Head of Corporate Affairs at Vanguard.
26 April 2018