Confused? You Should Be!...
The Problem…
A few things seem to occupy people’s minds when it comes to this stuff.
Have I got enough and how do I find out?
What’s the ‘best’ way to prepare my money and, later on, protect it?
What happens if I run out of money?
If I need long-term care, will that ruin everything?
These are all big questions that need to be answered in straightforward terms. Let’s start with some basics…
Your Ideal Retirement…
Ask yourself these questions:
What do you want retirement to look like?
When do you want to start it (if you haven’t already)?
If you knew the date of your death, how would you change your life (heavy!).
I think these questions help you build a picture of what your future might look like. An image of your destination (how can you plan your journey without a destination?!).
The Boring Numbers…
It can’t all be deep and emotional. At some point we need to attach some numbers so we can understand if your destination is achievable. This isn’t actually as hard as you think but it does require a logical, objective and, above all an honest approach.Start by making a cup of coffee (or something stiffer!) and try to work out what your essential expenses are. These are the costs you'll need to pay the bills and feed yourself. That’s a good starting point.Now, think about things more widely. What sort of lifestyle to you want? What will it look like? What types of activities would add real meaning and value to your life? Try to attach some numbers to this. What might that kind of lifestyle cost you on a monthly or annual basis?Now then, you'll be wrong with these figures. Don’t beat yourself up over them. The objective is to get an 'idea' of what they are. Something sensible that you can work with.
Guaranteed Income…
The next thing you need to do is work out or find out what your guaranteed income is. This could be things like:
State pension.
Final salary pension through work.
Rent from a buy-to-let property (although, strictly speaking, this isn’t ‘guaranteed’).
Annuity income.
This income is important. It’s income you can rely on for the rest of your life and will contribute to that all important lifestyle you either aspire to or want to maintain.
Any Gaps?...
It might be that your guaranteed income is enough to cover the cost of your essential expenses and your lifestyle. Great news!For most, however, there’s a gap that needs to be filled, but how? Well, this is where your other resources come in to play. This could be things like:
Money in the bank.
Investments.
Private pensions.
Pensions through work that build up a fund of money (different to final salary pensions).
What you need to do (and you might need some help with this) is work out if these other resources are going to be enough to cover the gap until… well… you’re dead!
It’s a Best Guess…
What I’ve spoken about so far is a process but, the reality is, no-one knows what the future holds. I’m sure I don’t need to tell you that. Some things that can throw a spanner in the works are:
Unplanned health issues.
Children who don’t quite get the idea of being independent!
Investment returns fluctuate.
You may end up spending more.
It’s impossible to predict what will happen which is why regularly revisiting this process is so important. It helps you change things in small ways rather than leaving it for a while and then having to change things in big ways, which nobody wants.
What Have Others Said?...
This isn’t theory. This is how it works in real life so I thought you might find it useful to see what others have said, having gone through the process with us:
Michael: “Marco listened to our needs, gathered all the relevant documents and details of the schemes that we had, this was presented to us in a clear, precise and fully understandable way in a language that we were able to comprehend.”
Patrick: “Marco conducted a comprehensive review of our current spending, future plans and pension packages and provided a clear, easily understood review of the options that we asked about. Marco was very understanding and non-judgemental; it was a delight that he provided the advice we required and didn’t try to sell us products that we didn’t need. We have a clear understanding around our options for early retirement.”
Happy planning!...