I appreciate the headline is somewhat contradictory - retiring or starting a new business are disparate choices. However, from past experience recessions can create a time to reflect on your working life and can also force decisions to be made through redundancy or the failure of an employer.
How to review your options in a recession
Retirement or starting a business are both daunting, emotionally and financially. If you are able to answer the financial question (ie affordability), then this can help ease the emotional journey. But how can you do this in a fact based, reliable way?
Our independent financial consultants recommend having a Lifetime Financial Plan
Our qualified independent financial advisers use Lifetime Financial Planning to offer informed financial advice. Cashflow planning is a detailed, yet simple way to understand and analyse your current and future predicted expenditure versus your income and capital. It can include both your regular expenditure alongside lump sum outlays and identifies the percentage return required on your savings, pensions and investments to ensure your money will last your lifetime.
Cash-flow projections act as a visual road map
The output of your Lifetime Financial Plan is a cash-flow projection which acts as a visual road map illustrating your future capital position and can be used for retirement planning, inheritance tax planning or to work out if you have enough capital to start your own business.
Cashflow planning offers different financial planning scenarios
Cashflow planning can include different scenarios; for example:
are you retiring now or at a specified time in the future?
working part-time rather than full-time?
downsizing your residential home?
It also includes an assumption for inflation, which is critical as this is often forgotten but can be so damaging for retirees.
How can a cashflow plan help you?
‘A cashflow plan such as this not only illustrates affordability of your aspirations, but it also then informs the level of risk required to achieve your objectives. Our aim is to always take the least amount of risk necessary to achieve the desired outcome (less risk leads to more certainty and visa-versa). I have found that many people have hopes and aspirations but are held back from putting them in place because they are worried about their affordability (no-one wants to run out of money). By analysing the facts, people can act with more confidence and having carefully considered the likely outcomes.’
Lonsdale independent financial advisers offer a no obligations initial financial consultation
Our Lonsdale independent financial advisers offer comprehensive financial advice. Our financial planners are available for an initial, no obligation meeting to discuss your personal financial requirements. Our Lonsdale Wealth Management offices are open for pre-booked meetings as we have sufficient space to social distance, or we can meet at your home (if suitable) or meet remotely via Microsoft Teams or Zoom. Feel free to contact us for an initial chat or complete our booking consultation form.'
Howard Goodship has written several articles for his Understanding Investments series. Read more below.
The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested. The contents of this article are for information purposes only and do not constitute individual advice. The Financial Conduct Authority does not regulate Cash Flow Plans or Cash Flow Modelling.