The Professional’s Trap: Why High Earners Often Under-Plan for Retirement

A senior manager and a specialist consultant couple sat with me recently, both in their late fifties, to work out what retirement might look like for them. Between them they earned well into six figures, had paid off their home years ahead of schedule, and had spent the time since with more surplus cash flow each month than either of them knew what to do with. When I asked them what income they thought they would need in retirement, and how that compared with what they spent today, neither had a clear answer. They had never really needed one. Whatever the household needed, the income had always been there to solve it.

It’s not an unusual position. Among many of the high income professionals I work with, there is rarely a set income (or spending) target for a future retirement, and often not even a clear snapshot or holistic view of what they currently hold across all the bits and pieces; such as super funds, investment accounts and other financial assets. The catch-22 is that the same income that makes a comfortable retirement achievable is also what makes planning for it feel unnecessary, or something that can be done at the last minute. This isn’t always the case, but it’s common enough.

The assumption that income equals security

Financial planning can often compete for time with the very career that generates the income being planned around, and it often loses out. A demanding job leaves little space for anything beyond the immediate list of things that need doing, and a high income has a way of absorbing problems before they become urgent enough to prompt a closer look. The mortgage gets paid without a budget. Super savings seem to just grow on their own as employers pay their SG obligations. Bills get paid, holidays get booked, and the quiet assumption that develops is that an income this size must already be taking care of retirement, in the same way it takes care of everything else.

Obviously, this is a wonderfully fortunate problem to have. Not everyone is so lucky to be able to say “we’ve never really had to worry about money”, but that doesn’t stop it being an issue when there’s no real idea of what happens when the income stops. What comes next?

Because that’s the difficulty. Incomes do eventually stop, whether at a chosen retirement date or earlier than planned, and the adequacy of what takes over when it’s gone is often an unknown that hasn’t been given due thought and preparation before now.

The gap between doing well and having a plan

Ask a high earning professional how they are doing financially and the answer is usually confident and generally unconcerned, and that’s reasonable up to a point. Ask the same person what income they expect to need in retirement, or how that compares with what they spend today, and the confidence tends to reduce markedly.

The couple I mentioned earlier were a clear example. It was entirely possible to see, from the outside, that they were doing well. Healthy pay cheques (evidenced by high tax bills), a mortgage-free home, and healthy super balances accumulated over long careers. What neither of them could easily provide when I asked, was a figure for how much they thought they would need to make in retirement to meet their goals and aspirations, or any real sense of how that compared with what they were spending now.

This is the specific gap the professional’s trap describes. It is not a shortage of assets. It is the absence of a clearly defined vision of what the future will need, and a consolidated view of today to measure that future against. Without both, “doing well” and “having a plan” can feel identical for years, right up until the point when the change is finally upon us.

What a plan adds beyond income

A financial plan takes the unformed mix of cash flow, savings and assets and adds structure around them. It helps define a target for retirement income, a timeline for reaching it, and it attempts to answer the question that has previously gone unasked, do I have enough? It creates efficiency to make the most of what is there, defining priorities, and identifies how to use the opportunities created by a high income to build security and peace of mind to offset the uncertainty that can come when a lifetime of working and earning eventually stops.

Perhaps most usefully, a plan converts a general sense of financial comfort into a specific, quantifiable answer to that question of “do I have enough?”. The process often leads to redefining what “enough” is, as it doesn’t just change from person to person, but even for the same person over time.

For the couple I mentioned earlier, that process didn't produce a fixed number so much as a moving target, one they could keep checking their progress against as their goals, their spending and their own sense of what "enough" looked like continued to solidify.

They no longer just assumed their working success would translate smoothly into an equally successful retirement, they had a plan for it.