This week we are continuing our retirement series and we are looking at my top 7 considerations when it comes to your wider portfolio of assets and investments. The last thing you should do is ignore them.

Think big – what must change?

Imagine drinking cappuccino in your beautiful aromatic Japanese-style garden or sipping Prosecco on the sunny patio before your guests gather around the beautiful oak table in the large, bright kitchen-dining room which is now the social heart of your home.

Retirement is a once-in-a-lifetime opportunity to get some things done. You’re financially independent and you’re going to have time on your hands. Chances are you can list these things off without prompting: the mossy garden that has been a bone of contention for your entire marriage; the stupid wall between the kitchen and the dining room; the pot-holed laneway to your house that has been responsible for banjaxing the suspension on a number of your cars over the years.

This is just about thinking about what you’re going to need money for, and when, and making sure you will have access to money when the time comes. What assets do you have beyond your pension that you can liquidise to produce income as and when required? I have software that makes this job very easy.

Take a coordinated investment approach

OK, so now you know what you need money for, have you got any assets you can liquidise to help you live that new-and-improved life? Remember, you’re paying fees and charges on all your investments and funds. Is it really worth hanging on to those bank shares for the rare and pitiful dividends they pay? Many of us simply end up with a hodgepodge of assets that we’ve somehow accumulated over our lifetimes, including but not limited to prize bonds, holiday homes, rental properties, pensions and savings accounts. Ruthlessly go through your portfolio. Invest what is not serving your long-term goals in making your life better now.

Know the difference between volatility and risk

Volatility, which is associated with the stock markets, can be your friend in the long term; it can be the means by which your equities gain value – though only if they are part of a globally diversified portfolio; otherwise, they’re too risky.

Look at this example: If you invest €250k for 25 years with an annualised return of 2%, that €250k becomes €410k. However, with a 6% annualised return, it becomes €1,720,968. If you’re in a position to embrace volatility, it can radically transform your financial story.

Risk, on the other hand, can permanently erode your capital. Institutional risk, currency risk, market risk, default risk, political risk – scrutinise your assets and investments and ask do any of them over-expose you to the risk of losing the asset. If the answer is yes, get rid of it. You don’t have the earning potential you once did to help you recover from losses. Understanding the difference will help you carry out step 2 above.

Don’t feel obliged to hoard your wealth for the next generation

We are conditioned to help our children. Many of us go into retirement right off the back of funding children through college, stumping up deposits for their first home and offering financial help in other ways. Let me put an alternative mindset to you; screw the kids! What I mean by this is instead of holding on to assets to pass on to them, release the value now while you’re still alive to give yourselves a comfortable retirement. You decide what happens to your money, not your kids.

Plan your generosity

Look at the annual gift exemption of €3,000 annually. This is a great way to give money to children or grandchildren while you’re alive in a tax-efficient way. If you gift larger amounts than €3,000 to a loved one (other than your spouse or civil partner), they eat into the beneficiary’s CAT (capital acquisitions tax) threshold. In this case, consider a section 73 life assurance plan, which will cover the CAT bill. You might also consider family partnerships. For farmers, there is agricultural relief. There are ways and means to be smart while being generous, but you’ve got to plan these things in advance.

Don’t let the (tax) tail wag the dog

Don’t shy away from taking action just because of a potential CGT (capital gains tax) liability. If you need to exit an investment or liquidise an asset to tarmac the driveway (see point 1), go ahead, pay the tax. Remember that if you’ve accumulated capital losses from Anglo-Irish Bank shares, or property, for example, you can offset them against future CGT liabilities, reducing or neutralising your bill.

Assume you will be penniless on your 95th birthday

This is a reinforcement of point 4, but it is a good philosophy to guide your retirement finances. By 95, you will have looked after loved ones by gifting or transferring assets and ensured you have had a comfortable retirement with the best of healthcare. For those of you who fancy you might see 100, don’t worry, you will have the state pension!

Book 30 minutes in my diary to discuss your financial planning requirements.