Where Should I Put My Retirement Money?

The question ‘where should I put my retirement money?’ is one that financial advisers are often asked. Unfortunately, there is not a one-size-fits-all response that can satisfactorily answer this question. In fact, the response to this question will more than likely involve a collection of questions in the opposite direction. These are likely to include;

  1. How long do you have until you plan to retire?
  2. Where would you like to retire?
  3. What sort of lifestyle would you like to enjoy?
  4. What assets do you already have in place?
  5. Will anyone be financially dependent on you in retirement

These six questions provide advisers with a good understanding of your current financial position and your longer-term objectives. Without understanding your personal circumstance, an adviser should not provide you with any form of advice, as the advice should always be constructed on a complete understanding of the client.

So instead of answering the question ‘where should I put my retirement money?’ this blog will explain why each question is being asked.

How long do you have until you plan to retire?

This question extremely important. An adviser must know firstly what assets you currently have in place and secondly how long you have until retirement. Once they understand this, they can help create a strategy that can help you meet your objective. Some people may require more growth-focused products whilst others may require a more defensive stance.

Advisers must take into account the power of inflation within their calculations. If you have a long period of time until retirement, the power of inflation will of course be much greater. As a result, advisers must create a strategy that combats the power of inflation which in developed markets erodes the real value of cash by approximately 2.5-3% per annum. 

Where would you like to retire?

Another question advisers must ask is where you are planning to retire. This question is important for several reasons. Firstly you may be planning on retiring overseas in a country with a highly volatile currency. If the majority of your assets are held in GBP for example, your living standards or expenditure could fluctuate each year depending on currency movements. An adviser will help devise a strategy that helps combat foreign exchange issues.

Secondly, an adviser must undertake research around your planned retirement destination. Living costs will vary in different locations so planning effectively is important. Moreover, as expats there are often other associated costs on top of basic living requirements. Including flights to see family and overseas medical insurance.

What sort of lifestyle would you like to enjoy?

An adviser will need to spend some time getting to know you as a person. In order to help you plan for your retirement effectively. Given the fact you will have more free time in retirement than ever before you must ensure you have sufficient capital to spend that time doing what you love.

What assets do you already have in place?

An adviser will undertake a full financial examination to explore what assets you already have in place. An adviser cannot propose a strategy without having a full understanding of your current position and objectives.

Will anybody be financially dependent on you in retirement and beyond?

An adviser will also need to know if you will still have dependants in retirement, such as children, siblings and grandchildren. You may require a significant sum of money for school fees or helping your children with getting on the property ladder. Moreover, an adviser will also investigate what provisions you have in place for your assets once you pass away.

Summary

To conclude, there is no simple answer to this question. Everyone’s situation is different and requires bespoke advice. Should you wish to take advantage of a complimentary financial review with a specialist, please click on the link below.

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deVere Insights is a proud component of the deVere Group. Our company has always prided itself on leading the way in the sphere of wealth management. This website is in place to share information and expertise.

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