When you approach retirement, the number one question on everyone’s mind - even if they don’t admit it out loud - is do I have enough money to last?
A professional financial plan can give you invaluable peace of mind on this matter, as well as extending how long your money lasts.
The factors that your retirement plan needs to consider are:
- Your essential costs
- Your costs through the first and most active years of retirement
- Your assets and income
- Your tax breaks
- Inflation
- Travel and cars
- Care home costs
All of these factors interrelate and need to be overlaid with your goals and plans and priorities.
Let’s expand on a few of these to show the impact on your life planning can have:
According to the Bank of England, £100 of groceries in 2001, costs £175 in 2021. You can expect a similar trend over the next twenty years while your are retired.
So ensuring that you have your essential costs protected against inflation is a key step. As is making sure you don’t miss any tax breaks or allowances.
This may mean investing or it might mean buying an annuity, depending on your risk profile and pensions.
If you have goals to travel, or buy a new car or take up a hobby when you retire, then you need a cash flow forecast to include these early costs. Here’s an example cashflow forecast prepared by an IFA:
The green shows
The red shows
The orange shows
Armed with a forecast like this, decisions on investment choices, how to use your pension and when to do things becomes very easy and helps you relax knowing you do have enough money.
