How much money do I need to retire on?

Monday 30 September, 2019

As financial advisers we often get asked this question when we provide pension advice, but everyone is different and the key to having enough money in retirement is to carefully consider your financial goals and then assess your income and expenditure so you know you will have enough income to pay for it. For more information review the Retirement Planning section on our website or contact one of our financial advisers for a free initial pension consultation.

As everyone is unique and has different financial aims and objectives it is impossible to give an answer when we’re asked – ‘how much income do I need when I retire?’

Lifetime financial planning 

So we can work out how much income you require when you stop work we produce a Lifetime Financial Plan using cashflow modelling when we offer financial advice. The Voyant software we use for cashflow modelling forecasts your current and future income and expenditure and offers live interaction so you can understand what impact certain decisions will have on your retirement.  For more information read: Lonsdale use Voyant software for cashflow planning.

Why is Voyant software useful for cashflow planning in retirement?

Our financial advisers can easily change the variables to show you different scenarios so you can clearly see how for example an expensive holiday or purchasing a new car would affect your finances.  Your personal lifetime financial plan can be updated when we meet so you have confidence that your financial plan is amended as your financial goals and objectives change during retirement

The three main types of retirement spending

Essentials - these include day to day spending on food, utilities, petrol and insurance.

Lifestyle and luxury - aspirational goods and services. For example, you might want to budget for a new car every few years, or an extended period of travel when you stop work.

Legacy - you might want to save or gift money to your children or other family so we can plan for this. Our inheritance tax planning considers gifting and trusts.  To review more information, visit our Estate Planning section on the website or read Howard Goodship’s article -What is Inheritance Tax Planning

Achieving the retirement income you need 

After we work out your cash flow requirements, we consider how we can generate the income you need in retirement. We assess your risk profile before investing your assets in suitable products to provide the required return. We normally meet our clients annually to ensure that their lifetime financial plan is still on track to provide their required level of income. 

How a financial adviser can help you with retirement planning

Using the services of an independent financial advisor can really assist you with your retirement planning. The earlier that you see a financial advisor the more chance you have of achieving the income you require in retirement. Retirement planning is not just about pension planning, but it is about investing any savings tax efficiently for the long-term, so you have enough money in retirement.

Neil Homer, independent financial adviser, Stafford said: 

'Many people contact us in their forties or fifties when they are getting closer to retirement age. They may have defined benefit pension schemes or defined contribution pension schemes, but they are concerned that these pensions will not generate enough income in retirement. Our financial advisers will incorporate the pension scheme income from workplace pensions or other savings into a lifetime financial plan so our clients know exactly how much income they will get in retirement. Using cash flow planning gives our clients peace of mind as they can see how the income from their pension schemes and savings can be invested to generate the income they need in retirement. Cash flow planning also gives clients confidence that they can spend money in retirement. We often find that people are nervous because they think that they are going to run out of money before they get to old age, or they are concerned that they won’t have enough income to pay for long-term care costs if necessary. However, our financial advisors make sure that we track your cashflow to age 99 and we discuss the cost of long-term care so you can see how you could pay for it if it was needed. If you need financial advice on paying for long-term care costs please read Richard Porter’s article – How to pay for care home fees’

In Summary…

Don’t wait until you are at retirement age to consider retirement planning.  The sooner you take pension advice the more likely you are to achieve your financial goals in retirement.  We have offices in St Albans, Harpenden, Barnet, Leeds / Bradford, Stafford, Ringwood and Ware so please contact us for a free initial retirement planning consultation.

Please note: The value of investments can fall as well as rise. You may not get back what you invest. The Financial Conduct Authority does not regulate cash flow modelling or tax advice.

 

 

 

 

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