When to start retirement planning? Yesterday!

If you are a true 50Up and haven’t started seriously financial planning for your retirement, it may be too late.

To use the cliché, 40 is the new 60, which means you need to start strategizing for retirement savings sooner, not later.

Some retirement planners surveyed 3000 people and, on average, found they were aged 61 before they were preparing for life after work.

By then, it’s not exactly too late to make a difference, but the most significant wealth builder known to most of us (time) is getting shorter.

So how old were you before you began the hard yards towards planning for your future, or how old will you be when you start?

The Moreton Group survey finds most people defer planning for retirement until usually 10 years too late and for those in their forties, giving up work seems far too distant.

It’s true that many of us, work-placed ageism notwithstanding, may choose to be employed way past 65 - either because we need the money or have more to contribute.

But there’s no doubt twenty years before finally, or even gradually, packing in work gives enough time for superannuation and compound interest to work their wonders.

Include other opportunities around property and other investments and sound financial advice around tax etc, and every year counts.

A joke amongst women eager for more agency is, “A man is not a plan.” And likewise, the aged pension is a safety net but, for many people, not a plan in itself. 

Compulsory superannuation takes some of the decision-making out of retirement planning but by no means all. The fund you are in and your contributions can make a big difference to the final nest egg.

Some people advise even starting in your twenties (see here) so you can understand compounding and get into good financial habits early enough to make a real difference.

Of course, human nature being what it is, the excellent advice we give to our kids about understanding their superannuation perhaps does not mean much until they are older.

I once met an American who spent 25 years working in misery as a prison officer, all to take advantage of a generous indexed pension payable from the age of 45. He was a rare exception.

My own planning came late, perhaps aged 45, with the arrival of kids and exposure to the tricks and traps of financial advice. 

We have done OK preparing for a retirement which may be 7-10 years away (who knows), but how much better could we have done if we had started five years earlier?

While I do declare an interest (see below), getting a trustworthy financial adviser on our side made a world of difference. Finding one is a story in itself but do not dismiss the fact many of us need guidance and expertise in this area.

You may have to pay for it, hopefully via a fee-for-service model, but early enough, good advice, if you stick to it, may be one of the best buys you ever make.

So when did you or will you start saving for your retirement, and would you/will you involve a financial planner or not? Do you regret not starting at forty? 

Any information contained in this communication is general advice, it does not take into account your individual circumstances, objectives, financial situation or needs. The writer also works for Life Sherpa, an online start-up that offers financial advice.