Retirement lessons you cannot afford to ignore - tips from an expert

We all know by now, or should know, that planning for retirement is essential if you want to enjoy the so-called golden years with financial independence.

As Warren Ingram says, retirement should be a time of enjoyment and relaxation, not one of stress.

To get to that worry-free state, there are some retirement lessons you absolutely cannot afford to ignore.

RELATED: Deciding HOW to be paid from your retirement investments once you do retire

And with the world in such a state of flux at the moment, this is a good time to talk about it.

"For those of us who are still working and contributing to our savings and our investments, it is all very unsettling... but for people who're already retired, that discontent goes up because you're watching your investments go down at a time when you need to draw from them."

The first thing to keep in mind is that people are living longer.

"When you say to people at age 50 or 55 that 'we should probably plan for your life to run out somewhere at age 100', usually they smile at you as if you're a bit crazy. However, it is a reality that there are lots of people all around the world including in South Africa that comfortably live to their late 80s or early 90s."

Ingram shares pointers to ensure your comfortable retirement.

Longevity is a real factor

Very few people will run out of money in year one of retirement. It is more likely that they could run out in year 20, says Ingram.
If you retire at 55, you could easily live another 35 years. Most people plan for 25 years of retirement and those extra 10 years is where things get desperate.
Your money needs to work almost as hard in retirement as it did while you were saving, so you need to be correctly invested.

Healthcare costs escalate faster than you think

Remember that medical aid premiums increase by well above inflation every year - often at 9% or 10%.

People who retired at 55 and assumed R5,000 a month for medical aid are now paying double or triple that amount a decade later.
Healthcare is probably the single biggest budget-buster in early retirement, says Ingram.

Lifestyle costs can be higher in retirement

People often assume that their lifestyle costs will reduce in retirement.
However, for the early stages, they often increase their lifestyle spending
You are still active, healthy, travelling, eating out and picking up hobbies - plan
for higher spending in your 60s, not lower.
Later in life, your lifestyle costs might reduce but your medical costs might increase.
Rather aim for the same lifestyle costs as you had when working, Ingram advises.

Your investments will experience a big drop during retirement

As an example - if you retire and the market drops 30%, you'll be selling some of your investments to fund your income at lower prices.
It's very unlikely that you can time your retirement to avoid a big market crash, so rather plan that there could be a crash at any time, says Ingram.
That means you should have a bigger emergency fund in retirement i.e. one year, and have a portion of money invested in bonds and cash.
Diversification and rebalancing will help to limit your losses and allow you to draw from low risk assets during the market crashes.

Scroll up to the audio player to listen to Ingram's detailed retirement planning advice