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When running a few km's, the whole time you think about how far left you have to go until you're done. When you are doing a few short sprints, all you think about is the small distance you are running right at that moment.
 
People often think of retirement planning as a marathon and become anxious about where they should be at that point in time and the issues, outside of their control, that may arise between now and retirement.

What we try to do is get our clients to refocus on the small goals directly in front of them e.g. how much they can contribute into super that month etc.

If a client couple came to us with $500,000 worth of retirement savings and we had told them that they need to reach circa $1,000,000 by retirement, they would scratch their head in disbelief and wonder where they are going to get another $500,000 from.

However, we know it’s feasible as it is a part of the plan that would have been made for them; that’s why we remind them not to focus on that $500,000 “marathon” but instead focus on the 6 monthly “sprints” towards this end goal.

An example:
  • We had a client couple who were 2 years into their 6-year plan.
 
  • In that small period there were so many things happening, such as the plan to downsize their home and pay off their mortgage, that we needed to narrow the focus on what was the most important at the time.
 
  • For them it meant focusing on maximising their contributions and getting the habits down pat, whilst pushing back on the sale of their home to a later date.
 
  • They were both on reasonably good income at the time and were making the right financial decisions.
 
  • Unfortunately, the business that the wife was working at had gone down, leaving her without a job. This meant the plan needed some changing.
 
  • We then decided on bringing forward the sale of the house and focus on that as a main goal, since it has become significantly harder to contribute into both accounts.
 
  • They adapted well and have stayed focus on each sprint as they come, as such they are heading in the right direction towards a good retirement.

Focusing on the end goal can be daunting, so just focus on what's in front of you and you will be fine.
Published by Dallas Davison, Michael Hogue and Ali Hogue. September 21, 2020