30 August 2016

3 Things the Olympics Teach Us About Retirement Planning

Takeaways from the experiences of Michael Phelps, Mo Farah and the New Zealand Olympic Team who competed and won.

If you’ve been following the action in Rio, you know that the Olympics can teach us a lot about just how far the combination of intense competition and a fierce drive to excel can push the boundaries of athletic achievement. But the Olympic Games Rio 2016 also impart a number of broader lessons that apply beyond the world of sports, including these three that can improve your odds of success in planning for retirement.

Lesson #1: Preparation is all

The journey of the gold-medal-winning NZ men’s pair of Eric Murray and Hamish Bond didn’t begin at the starting line of the race course on Rio’s Rodrigo de Freitas lagoon. It began years before, with grueling weight-lifting sessions, countless hours at the gym and thousands of miles on the water. Without that commitment to putting in the time, energy and effort beforehand, there would have been no victory.

The same goes for achieving a successful retirement. If you want a reasonable shot at having a secure post-career life, you must begin laying the groundwork well beforehand—indeed, decades in advance—and then build on that foundation throughout your career. The top priority is saving regularly. Some advisors suggest 15% or so of salary is a decent target, although you may need to ramp up your savings rate if you get a late start. Also key: an investment strategy that begins with building a broadly diversified portfolio of stocks and bonds that matches your tolerance for risk. But the impetus to plan for retirement—and the dedication to stick with your plan—must come from you. A secure retirement isn’t going to happen on its own.

Lesson #2: You've got to be ready to rebound from adversity

British distance runner Mo Farah was nearly halfway through the 10,000-meter Olympic final Saturday night when he went sprawling to the track after being accidentally tripped by another runner. It’s the kind of mishap that can have devastating consequences. A similar spill in the 1972 Olympics prevented the U.S.’s Jim Ryun from making the final in the 1,500 meter race, a distance at which he then held the world record. But Farah managed to scramble to his feet, compose himself, get back on pace and go on to win gold.

The path to retirement can also have its bumps, stumbles and detours. Indeed, hiccups in retirement planning can be due to unexpected health expenses, periods of unemployment, separation or divorce. Whether it’s a layoff derailing your well-laid savings plan, a bad investment decision taking a bite out of the value of your nest egg or some other setback, it’s crucial that you immediately assess the damage and then quickly come up with a plan to get back on track. To determine whether your recovery effort is working, you can periodically check in with Lifetime’s retirement income calculator to estimate your chances of being able to retire with the income you’ll need.

Lesson #3: The finish line is also a starting line

To see what your income will be, try the Lifetime Income Calculator.

To find out if the Lifetime Income Fund should be part of your retirement portfolio, request an information pack.

When a reporter asked Michael Phelps on Sunday night whether he might have one more Olympics in him, the 31-year-old, 27-time Olympic medalist replied that he’d swum his last race. “At the age of 31,” Phelps said, “I’m happy to start moving forward into a new chapter of my life.” In other words, the finish line of one phase of life was the starting line for another.

In many ways, someone entering retirement faces the same challenge as an athlete at the end of his sports career: how to make that next stage of life satisfying, meaningful and rewarding. In the case of retirement, making a successful transition from the workaday world to a post-career life demands a serious shift in thinking. On the financial front, after years of looking for ways to save, the focus in retirement suddenly becomes deciding how much you can safely afford to spend so your nest egg lasts as long as you do. Given today’s longer lifespans, you may last 30 or more years after NZ super kicks in. Check out Statistics NZ’s free Longevity Calculator for a 2016 prediction of how long you’re likely to live.

But a more momentous change may be adjusting to a new life where you don’t have the routine of a full-time job to provide structure each day. Which is why making a successful transition to retirement also requires lifestyle planning. This includes everything from deciding whether to stay in your current neighbourhood or relocate, to finding ways to stay physically fit and mentally alert to making sure you remain socially engaged with both family and friends. Failing to plan for these non-financial aspects of retirement as well as the financial ones, and you may find that your next chapter of life isn’t as satisfying and fulfilling as it should be.

This article has been adapted from the original article published in Money Magazine by Walter Updegrave, author of four books on retirement planning and investing: We’re Not in Kansas Anymore: How to Retire Rich in a Totally Changed World; Investing For The Financially Challenged; The Right Way To Invest In Mutual Funds; and How To Keep Your Savings Safe.