It’s an old rule of finance: whenever a major life event occurs, you should have a good look at all aspects of your finances to make sure that they’re still fit for purpose. The event could be any manner of things: a separation, house move, health scare, birth of children/grandchildren etc.

Retirement is also a major event. In fact, I’d say that retiring after decades of banking a regular pay-check and living within the structure and routine of work is one of life’s most dramatic transitions. And it needs to be planned.

When life changes, your finances may need to change, too. Retirement is one of those events that should trigger a full review of your money situation.

The main financial aspects that should be assessed at retirement are your:

• House;
• Investments;
• Debt;
• Income and expenditure;
• Insurances; and
• Will and family trust.
  
  

Not everyone will change all of these, but they should all be considered.

Retirement often coincides with moving house. If you do move, your financial position could change. This could mean that instead of owning a house and having only a small amount of money invested (in KiwiSaver, for instance) you may end up with significantly less wealth in your home, but a lot more money invested.

For example, before retirement you may have had a house worth $1.5m and $50,000 in KiwiSaver. This would mean that you were asset rich but cash poor and so you downsize, selling the house and buying one for $1m. Now you’ll have $550,000 in investments (ignoring sale and moving costs for simplicity).

Investing $550,000 is quite different from investing $50,000. Chances are, you will not invest this extra cash in KiwiSaver. This means that you are going to need a whole new investment strategy, quite possibly with a new investment manager. This could represent a very big change.

Retirement also means that your income and expenditure will be different. The amount and source of your income will change and you’ll probably spend your money on different things. More change, in other words.

This means you’ll need to revisit your budget – whether you have a formal one written down or you just manage your cashflow from week to week. Either way, you’ll need to consider whether you’ll have enough income to support your desired lifestyle, or whether you’ll have to cut your cloth to suit (or perhaps work part time for a while).

No one wants to retire with debt if they can avoid it. If you do have debt you may need to work a bit longer to clear it, or perhaps use funds from downsizing. Whether it’s a car loan or mortgage, you don’t want interest payments eating into your retirement income.