Page 14 - Advice Matters Magazine - FWP - Dec 24

Is FORO ruining your retirement?

FORO – the fear of running out. These questions, and more, play on peoples’ minds to
the point where they fall back into a FORO mind set.
I’d never heard the expression until I met Mark and Susan.
Of course I’d heard of FOMO, the fear of missing out, but To ease their anxiety, I recommended they include
never FORO. a contingency fund in their portfolio to ensure that
unplanned expenses were covered. That way, if
As the newly-retired couple sat across from me, explaining something unexpected pops up, their retirement
how they were so afraid of running out of savings that lifestyle strategy remains on track.
they were not enjoying the retirement they’d worked so
diligently for, I grasped the meaning of FORO immediately. 4. Enjoy the early years
FORO had been holding Mark and Susan back for too
They rarely went out for dinner, bought anything new or – long. I explained that hobbies, travel and social activities
heaven forbid – took a holiday. After a lifetime of saving are crucial to mental well-being. So once we had established
hard, paying off a mortgage and raising a family, Mark a responsible financial plan, I showed them how they could
and Susan were naturally frugal, but FORO had left them afford to spend, sensibly, and enjoy themselves. I especially
feeling vulnerable and afraid of the future.
encouraged them to make the most of their early retirement
After two decades as a financial planner, I’d come across years, while they were fit and energetic.
this situation before, although, it is unfortunately becoming 5. Schedule regular reviews
more common.
The final step in the process was my ongoing
Mark and Susan had never sought financial advice before commitment to Mark and Susan. Retirement planning
and weren’t sure what I could do to help, but came to see is not a set-and-forget strategy; it’s a journey through
me because they didn’t know where else to turn. every stage of life – physical retirement being one of
When I assured them that there was plenty I could do to those stages.
help, they visibly relaxed. By regularly reviewing their financial position, I helped
I explained that the key to overcoming FORO was having Mark and Susan monitor their spending and investment
a well-structured financial plan. After I outlined my 5-step performance, and made portfolio adjustments that kept
strategy, they were eager to proceed. them in control of their retirement plan.
The steps we took were as follows: Last week I bumped into the couple on the street. They
were glowing with excitement and told me they’d just
1. Conduct a financial assessment booked a Pacific cruise.
By thoroughly assessing their current financial position
(superannuation, savings, investment and social Of course, I was thrilled for them – it was a big tick off the
security entitlement), I formulated a picture of where bucket list! But when Susan said they’d turned FORO into
they were at, and their future cash flow projections. FOMO and were living their best lives, well, I’ll just say it
was one of those moments when I absolutely love my job!
2. Establish a sensible strategy
Working together, we identified essential living
expenses and discretionary expenses, then allocated Sources: www.superannuation.asn.au ‘The ASFA Retirement Standard’,
funding that balanced financial security with lifestyle The Association of Superannuation Funds of Australia Limited
goals. (accessed March 2024)
Next, we determined a retirement investment portfolio www.moneysmart.gov.au ‘Prepare to retire’, Moneysmart website
with a sensible withdrawal rate to support their (accessed March 2024)
retirement plans.
3. Create an emergency buffer
In my experience, the what if factor is a major concern
for retirees. What if…I become ill? What if…the fridge
breaks down? What if…the car dies?

14
DECEMBER 2024