THE RENOVATION STAGE- Excerpts of the book "Finance for dad"

What basic financial planning is required during the pre-retirement stage?

Time flies! You’re now moving toward that stage that is desired by some and dreaded by others: retirement. You’re making plans to stop working. You think about your current situation and the stage that you are about to experience. If you have set up a company, it is likely that your children work in it. You’ll be feeling pressure when they try to change what you have created. If you are an employee, you’ll be dealing with new generations that are more prepared, updated and energetic than you. It is also time to retire. You think and you calculate, you calculate and you think, over and over. You like your job and you don’t want to retire, but you know you have to, whether it is because of the legislations or because you can’t stand the pressure and you have to leave. For some self-privileged people, this situation will be easier than for others. Some of them could keep a steady level of income from work until retirement. Therefore, when it starts to decrease, they will be able to survive comfortably with the income they receive from the pension fund they have. Others, particularly the ones that have stopped receiving salary from the beginning of the stage, will have to struggle a little bit more. They could see their income going down before they start receiving their pension funds. In this case, they will have to make an additional effort to remain within the group of self privileged people.

CONTINGENCY PLAN

If you are part of the self-privileged people that lose their jobs during this stage and, as a consequence, experience an interruption of their income from work, it is important that you establish a contingency plan that should have, at least, the following provisions:

Adjust your financial plan to your current situation.

Check your financial statements, analyze thoroughly your income/expense chart and adjust your expense budget to your new situation. For a moment, the income/expense balance has gone toward one side. It is important to even it out by working with the part you have more control of: your expenses.

Recognize your current situation. Don’t think of yourself as another unemployed person. You should know that you are no longer an eligible candidate for a job; if you do get one, your services will be valued at a much lower rate than you were used to.

Don’t be left out of circulation. Don’t try to take advantage of the situation to take a long holiday, thinking that with your abilities, connections and experience you’ll be able to get a job or start a business “whenever you want”. Each day that passes by will make it harder for you to go back to the working world.

Keep your emotional stability intact. It’s not about you being worthless, disabled or unpleasant. It´s not like that. Look around you; it is a normal fact. Companies want to hire new people at lower costs.

Renew your knowledge. While you were focused on your job, the world continued moving forward. It is possible that you were left behind and you require upskilling in your field and direct your activities toward new interests. In one word: renew yourself.

At the end, you’ll be able to go through this situation and remain within the group of self-privileged people. This experience will be very useful for you so that you can treasure the quality of life you have enjoyed.

DOWNSHIFTING

You are very close to completing your retirement fund. You are thinking about your future. You probably won't want to stop working, but simply slow down. It is something like the concept of “Downshifting” (very popular in the mid- 90s, which consists of reducing working hours and dedicating more time to leisure activities). If everything adds up, making a decision will be much easier. There won’t be any money problems and that is fortunate. Neither old age nor poverty is a good companion; even less if they come together. In the middle of this stage, it is necessary to start getting ready for transition. Once you finish your responsibility related to children, you start living a new life with new goals, new values and a different way of seeing things. You need to refresh yourself; you need to stop and to fill your lungs with air, to start your life with a newfound enthusiasm and energy. It is important to get ready to take on more challenges and enjoy them!