Life is full of transitions, from starting school for the first time to leaving home, getting married, having children and eventually, for most of us, retiring from work.
We rightly think of retirement as a cause for celebration and an opportunity to pursue important goals such as travelling or spending time with family. Yet, while your later years are a chance to reap the rewards of a lifetime of hard work, the transition can be challenging.
You might struggle with the change to your routine and some retirees experience difficulties finding purpose in later life. There are also financial challenges to overcome too, so you can afford to fund your desired lifestyle.
That’s where we come in.
With our support, finishing work and drawing on your savings for the first time can be far less stressful and you may be more likely to achieve your dream retirement. However, you might not know exactly how the process works.
In our three-part series on navigating the transition to retirement, we’ll explain exactly how we guide you through each step.
This month, the first instalment outlines what our initial meetings might look like and how we assess your finances.
The journey to retirement starts with your goals
You might expect the first meeting with your adviser to focus on your pensions and savings, but before we discuss financial matters, we’ll talk about your goals in retirement.
We will eventually look at your assets and consider how you will generate an income in retirement. But first, we need to determine what kind of lifestyle you want to lead and how much that is likely to cost.
For instance, do you want to travel a lot, or would you be happier spending time at home with the family? Perhaps you like eating out regularly, and you might have hobbies you want to pursue.
You’ll also need to make decisions about your living situation and whether you want to stay where you are, downsize, or move to a different area.
All these decisions help you build a picture of what your dream retirement looks like. This gives us a goal to aim for and throughout the rest of the process, we’ll discuss what you need to do to achieve that lifestyle.
We can use cashflow planning to show you how and when you can afford to retire
Choosing the right time to retire is important because you need to make sure your savings will be adequate to fund your chosen lifestyle for the foreseeable future.
Yet, Financial Planning Today reports that 21% of savers don’t know when they will be able to retire.
Fortunately, we can use cashflow planning software to help you answer this question.
This advanced computer software allows us to input all your expenses including:
- Mortgage or rent
- Utility bills
- Groceries
- Eating out and socialising
- Travel (including the cost of running a car or using public transport)
- Financially supporting family members.
This gives us a good estimate of how much you’re likely to spend each year in retirement.
We’ll then input information about your assets. This includes your:
- Pensions
- ISAs
- General Investment Accounts (GIAs)
- Cash savings
- Property
Using all this data, the software can tell you how many years you’ll be able to afford to maintain your standard of living for. Cashflow forecasts can also take inflation into account and predict how costs might increase over time.
This means you can get an accurate estimate of when you might be able to retire.
For instance, we might find that your savings will last you around 30 years, based on your projected spending and estimates about inflation. If you want to retire at 65, this means you’d be able to fund your lifestyle until 95, so you would probably have enough savings.
Yet, if you planned to retire at 50, you’d only be able to fund yourself until age 80. As life expectancies increase, this could mean you run out of money in retirement.
The information from cashflow forecasting gives you clarity about your plans. In some cases, you might find that you have a shortfall in your savings and need to build more wealth before retiring. Equally, you may discover that you already have more than enough to pay for your perfect lifestyle, meaning you could retire earlier than planned.
Overall, our initial meetings with you offer peace of mind. Once you have all the facts about how and when you can retire, you can be confident that you’ll be able to do everything you want to in later life without worrying about your finances.
Once we have established your goals and retirement timeline, we can help you manage your pensions
After our initial discussions about your retirement goals and the kind of lifestyle you can afford, we will begin reviewing your pensions.
Next month, the second part of the series will explain how we help you manage your pension savings to ensure your wealth is growing and you can access it when you need it.
Get in touch
If you’re planning to make the transition to retirement soon, we can support you.
Please give us a call on 01276 855717 or email info@braywealth.com today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate cashflow planning.
An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
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