Two forms of misery

A recent article in the Melbourne Age (“The Science of Super: Are we saving too much and spending too little?”, July 11, 2023) quoted psychologist George Loewenstein: “In dealing with this retirement problem, basically you’re facing two forms of misery. One form of misery is expending your resources too quickly and finishing up destitute. The other one is spending them too slowly and dying without having had as much fun as you could have”.

I’ll pay that. We’ve written extensively about this very issue in our Retirement Hub. It’s one of the great conundrums of planning retirement income and investment.

Another cheery conclusion in the same article, referring to the many moving parts involved in retirement income planning, was that “As we age, our capacity to make such complex calculations actually declines”.

Oh, really? As someone who has worked with retirees for over 35 years now, (including several who’ve remained as sharp as a tack well into their 90s), and as someone on the wrong side of the so-called retirement age himself, I have both professional and personal reasons to arc up about that second conclusion. If I find the kid who wrote that I’ll run him over with my Zimmer Frame.

What’s not in doubt though, is that in those 35 years, notwithstanding the many “Simpler Super” initiatives, advice reforms, Royal Commissions and the like, it hasn’t gotten easier. The one constant is change. Sometimes for the better (relaxation of contribution rules), sometimes not (Transfer Balance Caps). It’s many things, but it’s not easy.

Among the laundry list of – usually competing – priorities are:

  • The right investment mix, balancing optimum return vs short and long term risk
  • The need (or otherwise) to draw on capital, to supplement investment income and to meet occasional capital requirements
  • Future age pension entitlement
  • Taxation
  • Estate planning – i.e. ensuring the right beneficiaries are catered for when the inevitable happens.

And as we’re all hoping this retirement thing will be a long term proposition, the deliberations on these matters have to look decades into the future, rather than just the next month or two.

This calls for some pretty serious firepower in the number-crunching department. Now at the risk of drawing on a blatant plug to bring this home, we’ve learned a thing or two over those 35 years, and in our toolkit these days is our homegrown Retirement Income Projector. It’s designed specifically to crunch all those numbers, to test the impact of different investment strategies, and to offer up the optimum solution given each individual’s circumstances.

Developed by one of those old people supposedly losing his marbles. Hmmphh!

Anyway, it would be our pleasure to use it to save you from either of the two forms of misery. You can even test drive it here.

Alan Rimmer

Alan has had a lengthy career in financial planning and management roles with the COUNT group, Wilson Dilworth and Perpetual. He founded ARA in 2002 to provide personal financial services free of the shackles of corporate ownership. For more than 20 years ARA has specialised in retirement planning and currently assists some 700 families with their financial affairs. A devoted family man, he spends his spare time looking for rocket ship movies he hasn’t seen yet, and wondering where his hair went.