Recently I had the opportunity of addressing a group of graduate students.
At the end of my presentation, I could see eyes glazing over and could hear the shuffling of feet.
My detailed discussion on retirement planning; budgeting and superannuation strategies had fallen on deaf ears. What could be wrong? The content was detailed and accurate ( weeks of research had gone into ensuring it was correct and relevant ) and yet – I hadn’t got through.
I then thought about the audience – anyone under 30 has never experienced a recession ( let alone a depression ) talk of interest rates hovering around 17-18% is stuff old folks ( parents ) talk about; unemployment above 10% – again, something they’ve read about in books. Saving for retirement? – Why? – “That’s years away!” – “It’ll be OK” – “It’ll work itself out, after all, we’ve got superannuation to take care of that.” Really?
The latest Association of Superannuation Funds of Australia Retirement Standard showed that a couple looking to achieve a “comfortable” retirement needed $57,817 a year to spend, whilst those seeking a modest retirement lifestyle needed $33,509 a year to spend. In todays’ low interest rate environment, that means to fund a “comfortable” lifestyle, a couple would need a Super balance upwards of $1.5MILLION. ( without eating into their capital ). And that is to just maintain a “comfortable” lifestyle – no treats. No overseas holidays. No new cars. No MAJOR purchases. Just maintaining a “comfortable” lifestyle.
Now we all know this. We’ve all heard ( for years now ) about the importance of planning for our retirement; how the pension as we know it, will not be available when we retire. And yet, what changes have most people made? If you guessed nothing – you’re pretty much right!
Why is this so? – well, just like that graduate audience with which I had trouble connecting, the message needs to be delivered another way. Humans have trouble looking forward and most find it much easier to look back. So, when I next had the opportunity to speak about retirement, I presented the story differently – and I’d like to share it with you –
“I would ask you to close your eyes, and for a moment, picture in your mind – you are 75 years of age. You are looking back on your last 10 years ( you still were able to retire at 65 ) and what do you see? 10 years of excitement / enjoyment / doing the things you always wanted – that European Adventure / that African Safari. You can hear the sounds and smell the scents of the Serengeti; you can see the elephants marching through the brushes just metres from where you stand in quiet awe, next to your tour guide. WOW! Or you see the joy on your grandchild’s face as you present them with your retirement gift ( a deposit for their first home ) – how great do you feel for being able to help them get started? What a feeling of fulfilment – the result of careful planning ( having a plan and sticking to it ) great feeling – isn’t it?”
“Now, close your eyes again – you are 75 years of age and you have little money in the bank – you struggle to make ends meet and the arrival of the mail causes anxiety and fear ( when is that electricity bill due? / how am I going to pay it, there’s no more money coming in? How do you feel? This time, not so great!”
Both of these scenarios are real. Both of these examples are the result of a lifetime of work. The average Australian worker ( by age 65 ) will have earned in excess of $3MILLION……….not as a couple ( a couple both working will generally have earnt in excess of $5 MILLION ). Both of these scenarios have little or nothing to do with what people earn. Both of these have everything to do with what we do with what we earn!!! And the difference between the two scenarios comes down to – PLANNING.
“People don’t plan to fail – they just fail to plan…………….”
Planning is central to the attainment of all goals. It’s equally true for short-term, medium, and long-term goals, as well as those of either a personal or professional nature.
What Planning Is and Isn’t.
Perhaps some common misconceptions of what a plan is and what it does have caused many people to shy away from the planning process. First, planning is not deciding each step in detail in advance and then blindly following through. Nor is it taking a casual stroll through the mind in the hope of coming up with a loosely connected stream of thoughts.
Good planning lies somewhere in between these extremes. What’s more, a good plan should be looked on as a means for achieving goals, not as an end in itself.As President Eisenhower once put it –“Plans are nothing, but planning is everything”. While it’s impossible to completely avoid crises and unexpected events either in business or in your personal life, you should still try to plan as much as you can. Good planning pays off by creating direction, excitement, and motivation.
Turning goals into action.
In my example above, I got you to dream ( day dream ) about the future. The action that will help prevent that day dream becoming a reality nightmare is effective planning. A key consideration of effective planning is learning how to transform goals into attainable steps ( ACTIONS ). This is where many seem to struggle; consequently, many peoples’ goals (especially long term goals ) never get addressed.
Once we have ‘dreamt’ of what we would like to achieve, the plan should follow –
Goals ( to be achieved ) need to be SMART –
S – Specific – “ going on a holiday” isn’t enough. “ Going on a 25 day European Holiday, within 2 years, with a 10 day cruise down the Danube, 5 days in Paris, 5 days in Rome and 5 days in London “ – is specific.
M- Measurable – the detail of the trip ( the itinerary ) and the cost on a ‘vision board’ can help as a daily reminder to keep yourself focused on the target.
A – Attainable – the goal needs to be realistic. If you are 21 and only working part time at McDonald’s, the European ‘trip of a lifetime’ might be unrealistic. Dream big and aim for the stars, but keep one foot firmly based in reality. If you’ve never travelled before – New Zealand is a great first adventure!
R – Relevant – for goals to be achieved they need to be relevant to you. They need to be YOUR goals. If they have no relevance to you, you will not have the discipline to stick to the regime.
T – Time – without a time frame, your goal will remain a pipe dream. Placing a time frame changes it from a ‘wish’ to a ‘will’. “We will be going to Europe in May 2015” is far more powerful than “We’ll go to Europe one day…………”
By applying the SMART formula to our goals, we set in place a specific set of tasks and activities to accomplish our goals. In the above example:
- (S ) we would get an itinerary
- (M) obtain a detailed quotation from the travel agent
- (A) we might open a separate account specifically as a saving fund for the trip and work out a monthly savings plan
- (R) we would refer to our brochures and map out our daily experiences, choosing all the things we’d enjoy
- (T) we’d have a ‘holiday countdown calendar’ – marking off the days to our departure
We know this works, because all of us have ( in the past ) done exactly the same.
So – if it works, why don’t we all do it, all the time? Good question…………..- because for many of us – looking forward is – too vague – too hard………….. and for many – too late.
Take a moment to reflect on the earlier example of my second address –
I have never met a 75 year old who wishes they had spent more time at work – but many wish they had been smarter with their money / many wish they had taken more notice of saving / many wish they had gotten a bigger bucket for their bucket list.
Whilst you still have the chance – GET A BIGGER BUCKET FOR YOUR BUCKET LIST……………….
If you’d like a hand building a bigger bucket, give me and the team at Strategies for Wealth a call – and let’s sit down together and plan your bucket list.