Retirement Life
8 December 2021

Day of Reckoning

Russian author Leo Tolstoy had something to say about nearly every aspect of human existence, and money was no exception. In his novel Anna Karenina, Tolstoy has Prince Vronski (a chief character) have a “day of reckoning” five times each year - every couple of months, Vronski would have a day when he secreted himself away to sort his finances.

This was a day when Vronski tolerated no interruption; he got out of his daily routine to sort out his money, establish his priorities and make sure he could survive (if not actually thrive) for another couple of months.

Like a lot of people who live on credit, Vronski spent a lot of his day of reckoning juggling his various debts and deciding who would get paid and who would have to wait longer. At the end of the day, he would hope to have his affairs in order (or at least in the best order they could be – basically, he was always insolvent).

As we approach the end of the year, this seems an excellent time for financial reckoning, and I believe that retired people should put aside time to do some reckoning. It seems to me that retirement is a time in life when money and finance are most important; it is a time when there is little room for mistakes and the price of safety is vigilance.

There are four main things that retired people should reckon with and ensure that they have right:


A reckoning of your investments is the most important: in retirement, the big thing is that your investments are both liquid and diversified. Liquidity (the ability to buy and sell investments quickly with little cost or bother) means that most of your investments should be on publicly listed markets so that you can draw on them at any time.

Retired people are usually regularly drawing on capital and, furthermore, they need to be ready in case of emergency to draw more capital. Liquidity is important.

You should check that your investments remain well diversified. This means that you are invested in all the main investment types (shares, listed property, fixed interest and cash) and that within each of these types you have a wide range of securities.

Check that your portfolio is performing well and compare it to the other funds and portfolios that have the same amount of risk – i.e. if you are in a balanced fund, make sure that you are getting a similar return or better than other balanced funds.

Income and Expenditure

Reckon up your budget – are you living too high or too low; does the budget feel a bit tight or is it easy? If there is a problem, it should prompt you to have a look at two things: your expenditure level and your drawdown rate. Spend some of your day of reckoning working out where you are spending your money – you just may get a surprise when you know exactly where it is going.

Consider also how much you are taking from your investments; a key thing to look at is whether your investment balance is growing or reducing. Most people should see a reduction in their investment balance from one year to the next, but you should reckon whether the balance is reducing too quickly or too slowly – it is possible that you may have to reduce the amount that you are taking from it, but it could also be that you may take more.

Remembering, of course, that I am both a Director and Shareholder of Lifetime, you should know that drawing the right amount of income from your investments is what Lifetime is all about. At the risk of having you think, “well, ‘e would say that, wouldn’t ‘e” you should consider Lifetime, as we do manage your income level to maximise your annual income while ensuring it lasts.

Wills and Succession

This is not something you should have to change often but you should have a little think about whether anything within the family has changed that could require a change to your will.

If you have settled a family trust you should remember that the Trusts Act came into effect last year and, if you have not already, you should check that the trust is still doing a job for you or whether it could more usefully be wound up. At the same time ensure that your Enduring Powers of Attorney still reflect your wishes.

The House

It is likely that your house is your biggest asset and, if need be, it can be a source of income for you. This income could come from a reverse mortgage (or similar), from renting out a room or perhaps downsizing. This last is most important: one of the key reasons for periodically setting aside some time for a reckoning is that you step out of mundane daily living and try to have a fresh look at your affairs. It may be that the house is getting harder to manage and keep, and that the time has come for you to downsize –consider whether the time has come to make the move.

Vronski’s finances were apparently a mess, and he probably spent a whole day doing his reckoning. I trust your reckoning is not so hard; an hour or two running over these areas should be sufficient (although if you have a problem in one or more of these areas it may take longer).

Finally, I hope you have an excellent summer and, with the idea that you should take a leaf out of Tolstoy’s book (his books had lots of leaves!), I wish you all the best for the season and a very Happy New Year.

Photo of Martin Hawes
Written by:

Martin Hawes

Martin Hawes is not a Financial Adviser or a Financial Advice Provider, and the views in this article are not intended to be financial advice. The views and opinions are general in nature, and may not be relevant to an individual’s circumstances. Before making any investment, insurance or other financial decisions, you should consult a professional financial adviser. Martin Hawes is a director and shareholder in Lifetime Income.