Following through from planning to executing


Committing to your retirement strategy and long-term goals pays off in the long run, while changing course without good grounds to do so can end up costing you. Here’s why.

When investing and saving for retirement, we often think that planning is the difficult part. However, many financial advisers would argue that planning can be relatively straightforward, especially if professional advice is sought. Executing the plan efficiently, however, can be more difficult, but doing so effectively is well worth the effort.

Focus on goals

Carl Richards, the former New York Times columnist and author, maintains that successful financial planning requires goal-setting, regular reviews of these goals, and adaptations along the way.

In his most recent book, The One-Page Financial Plan, Richards says we “do need to plan. But we’re far better off setting specific but flexible goals that reflect both our personal values and our best guesses about the future. Then we can do our best to reach those goals, revising our guesses and making course corrections when things change.”

Warren Ingram, the executive director of Galileo Capital, agrees with the “goals” approach because it helps remove emotion from investing, and helps set and manage expectations over the long period of time that retirement planning generally requires. Given its long-term nature, planning for retirement is very hard, which makes executing it and staying disciplined even harder.

As a practical way of dealing with a timeframe of more than 20 years, Ingram says investors should create “five-year goals and then break that into a series of one-year goals.” However, he advises against too much complexity: “You can’t have too many goals, but you can create a plan that’s too complicated.”

Get good advice

Involving a financial adviser from the start to help you figure out what you’d like to achieve by the time you retire, and then to set goals to attain this, is critical. Ingram says that a third of people would generally be able to do this planning by themselves, another third would have very little idea of how to proceed, and the final third would have some idea of what their retirement plan should look like, but would need help to implement it.

Even for those who are comfortable doing their retirement planning by themselves, says Ingram, there is merit in having professional assistance, if only to provide objective input.

Change is the only constant

You need to accept that even with the best-laid plans, you’ll probably have to adapt your retirement plans at some point. The kinds of events that would require a retirement rethink include marriage, divorce, having children or being retrenched.

Short-term market movements are not included in the list above, and are generally not a good reason to change course. In fact, at moments like these, having a plan – and sticking to it – will stand you in good stead. Panicking in 2008 and selling at the lows of the market would have been exactly that: panic. In times of increased volatility, being measured, disciplined and focused on your plan will ensure you’re in the best possible position.

You do not need to change your strategy if you suffer losses. In fact, selling an asset class or shares or an investment in a fund at that point is arguably the worst thing you can do because you would be locking in those losses. Investment professionals talk about a permanent loss of capital, and this should be avoided at all costs –particularly if you’re nearing retirement age.

The best course of action would be to find out why your investment has shown negative performance. If you’re correctly diversified across asset classes, any drop in your portfolio is likely to be as a result of factors that are out of your control.

Remember, cashing out can cost you

Aside from this, one of the biggest mistakes those saving for retirement can make is to cash out their retirement savings when they switch jobs, with a plan to recover those savings later. Many traditional retirement annuities make it difficult to change or liquidate an investment, and you can incur costs if you decide to cancel a product.

This is because the costs of creating the product are often paid upfront by the investment company, and are recouped from the consumer over the lifetime of the product. So if it’s cancelled early, these costs still need to paid. You’ve got very little hope of recovering those penalties (and the compounded losses in potential gains) over the long term.

Finally, know that you probably won’t reach all of the retirement savings goals you set yourself. But as Richards reiterates, this isn’t the end of the world. As long as you’re planning, and checking in and measuring your progress regularly, you’ll be able to adjust your expectations to set yourself up for the best chance of success.

Disclaimer: This article is meant only as information and should not be taken as financial advice. For tailored financial advice, please contact your financial adviser. Discovery Life Investment Services Pty (Ltd), branded as Discovery Invest, is an authorised financial services provider. Registration number 2007/005969/07.

Make reaching your investment goals easy

Investing for retirement doesn’t have to be difficult. Speak to your financial adviser about your goals and how you can achieve them. If you do not have a financial adviser, you can leave your details and Discovery Invest will call you back.

Create and build wealth with our flexible investment plans

Our unique shared-value model rewards you for taking responsibility for your financial future. Our investment plans have unique benefits that reward you for saving for longer, investing more, and getting healthier. They include:

  • Discovery BoostersTM - which grow your investment
  • Discovery Fee OptimisersTM - which reduce fees on your investment
  • Discovery ProtectorsTM - which give you peace of mind by protecting your investment

To take advantage of these innovative products, find out more here or speak to your financial adviser today.

Related articles


Retirement and tax – what you need to know: Part 1

Tax laws have likely changed a lot since your youth and adulthood, and these changes can affect your retirement savings. While you need to consider the impact of tax when planning your retirement savings strategy, it shouldn’t be your primary concern. Here’s Part 1 of a handy guide.


Boosting your retirement savings through shared-value life cover

Life cover that allows you to get a substantial portion of your premiums back by encouraging and helping you to get healthy and stay healthy lets you benefit while you are still alive. Here is how Benna Koorsten boosted his retirement savings by R2.7 million.


Are you financially prepared for living longer?

We have all heard "50 is the new 40". It may be truer than you think. The world over people are living longer. Although longevity is a positive, financial behaviour combined with other knock-on effects of a longer life have to be considered.

Log in

Please click here to login into Discovery Digital Id

Please click here to login into Discovery Digital Id