The Retirement Newsletter: Starting to plan for your retirement
Issue Number: -132 — Let’s do a SWOT
Photo by Myriam Jessier on Unsplash
Welcome
Welcome to issue -132*.
This week I will continue writing about how to plan for your retirement and how you can use a SWOT analysis as part of the process.
Planning
OK, back to planning.
In issue -134, I wrote about the reasons to retire, and in issue -133 about how I determined my date to retire. In issue -133, I also introduced the tool I used for my planning — Evernote, and I then mentioned SWOT analysis.
So, what is SWOT?
SWOT analysis
Depending on your career or industry, you may not have come across SWOT, but it was the thing to do on any project at one place I worked. They were SWOT crazy.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats — it's a way of helping you plan and examine a project, and I will walk you through the process below. However, if you want to find out more about SWOT, have a look at Wikipedia or have a look at Amazon.
So, SWOT.
The project we have, and our aim, is to retire at a specific date. We need to identify the Strengths, Weaknesses, Opportunities, and Threats associated with our retirement project.
OK, at first glance, it may seem hard to identify the Strengths, Weaknesses, Opportunities, and Threats associated with our retirement project, but let's have a go.
Now, you don't need to do a SWOT analysis, but I must admit I found it extremely useful.
Strengths
OK, identifying strengths can be tricky for a retirement project, and when I did my analysis, I ended up with the following:
Control — I could control how and when I retired — I had a retirement date
Skills — I had the skills I needed to retire, and I could also use these skills in my retirement to give me the retirement I want.
Plan — this comes back to control — it is my project — plan it!
Fitness and health — again, control and a plan — it's my project. If you are fit and healthy, then great — a real strength. If not (like me), you can take control and get fit and healthy for a long retirement.
A good pension plan — hopefully, you have this, either through your employer or a personal pension plan — luckily for me, I do.
Essentially, the strengths come down to it being your project and you having the final say in matters. Well, that is what I found.
What could you add to the above?
Weaknesses
Right, weaknesses. Again, a tricky one, and I always feel that weaknesses and threats can overlap. However, some weaknesses for me were:
Unable to draw my pension early, hence no money for the start of my retirement.
Loss of control causes a shift in my plans.
Failing health means I can't reach your pension goals.
Changes in my personal circumstances impacting my plan.
Current financial burdens — mortgage, car, card payments, etc. — don't get paid off and eat into my pension.
Lack of flexibility — my retirement date is fixed, and I can't pivot or change in response to circumstances.
OK, so what can you add to this?
Opportunities
Opportunities are the most straightforward category — well, I think they are. So:
Developing new skills as part of planning to retire — these skills may become projects (side-hustles) or hobbies once I have retired.
Getting a new job with better pay to help swell my pension and possibly help me move you to a part of the country where I want to settle when I retire (the advantage here is the new company picks up the resettlement costs).
Getting my current employer to make me redundant just before I retire (I know of many people who have managed to pull that one off!) so I get redundancy pay to help swell my pension pot.
Taking control of my current job, so it helps my retirement plans.
Creating time to get fit and control health.
Plan for a future I want.
I am willing to bet that you have more opportunities than the above that you can list.
Threats
And finally, threats, again, a little tricky:
I get fired from my current job, and this impacts my savings and plans.
Other demands on my time kill my plans.
I fail to pay off debts and carry them into my retirement.
I fail to control my health.
I suffer an unexpected illness.
Changes to tax laws reduce my pension pot — I can't control this, so I decided it is almost not worth worrying about.
Market crash impacts my pension — hopefully, five to ten years out from retiring, you (or the company looking after your pension) has started to move your pension assets into less risky investments, so this may not be a big threat.
What is your most serious threat to your retirement, and how can you plan to avoid it?
SWOT wrap
OK, so that is SWOT, and I think it is a valuable exercise as it will help you construct your plan. But what did it tell me?
Well, it helped me focus on some critical aspects of my situation at the time and showed that I needed to focus on:
Money — Do a 'health check' on my pension and get my current debts cleared as soon as possible.
Job — look for a new job that would hopefully give me better control over my plans and help with relocation expenses.
Health — get a health check and get fit.
With the SWOT done, it was time to plan — and that will the subject of my next newsletter.
The Future — what are you going to do?
With all the planning to retire — don't forget to think about and plan what you will do once you have retired.
As I get closer to my retirement date, I will say more about planning for once you have retired.
What are your plans?
Money
I'm currently reading about different pension-pot strategies, and believe it or not, it is pretty interesting — no doubt this will make it into a later newsletter.
What is your strategy?
In the news
Some pension related news stories:
State pension predicted to rise by 8% in the UK — BBC
OK, another UK news story, but this one also applies worldwide
Average losses from pension scams double in a year, with victims typically losing more than £50,000 — Sky News
And, from the Sky News piece, five common signs to watch out for in pension scams (and these are direct quotes from the piece):
“Being offered a free pension review out of the blue.”
“Being offered guaranteed higher returns — people who claim they can get you better returns on your pension savings.”
“Being offered help to release cash from your pension, even though you are under 55.”
“High-pressure sales tactics — scammers may try to pressure you with "time-limited offers" or send a courier to your door to wait while you sign documents.”
“Unusual investments which tend to be unregulated and high-risk”
And some more worrying news for Brits and their pensions, and this time it is Brexit related:
State pension amount is changing for Brits next year because of Brexit — Manchester Evening News
Next week
OK, so we have looked at SWOT analysis - now it's time to start planning.
Next week, making plans - see you then.
Thanks
Thanks for taking the time to read this newsletter, and please don't hesitate to share it with your friends or on social media using the buttons below.
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Until next time,
Nick
PS, If you have something you would like to contribute to the newsletter - a story, advice, anything - please get in touch.
* I am counting down the number of weeks until I retire.