Howard Goodship, chartered financial planner and member of the Ringwood financial planning team has written his seventh article in a series on Understanding Investments. To read other articles in the Understanding Investments series please see the articles below or visit our New to Investing web page.
Understanding Investment Articles
What is retirement planning?
This article is less about investments and more about helping you understand how much money you will need to enjoy a sustainable retirement. It’s about having the confidence to enjoy retirement fully, rather than worrying whether you have enough savings and perhaps holding back from doing the things you’d like to do.
Understanding the different retirement phases
In my experience of working with clients throughout their retirement, it seems there are two distinct stages; the first is “The Golden Years” when clients fulfil lifelong ambitions of travel, spending time and money on hobbies and interests they always wanted to do once they have more time. This may also require capital to update the house, cars and perhaps offer financial help to their children. The hobbies and interests will be different for everyone, but the common theme is they usually cost money. The second stage is “The Later Years”, when those aspirations have been fulfilled and life becomes more sedate and generally less expensive. Having said that, whilst there are less large capital outgoings, regular expenditure doesn’t change as much as most people expect. This is because you might require assistance with jobs around the house, cleaning, tending the garden etc. The final very significant expense could then be for Care, either in your own home or paying care home fees in a Residential Care Home.
So how do you know whether your money will last in retirement?
The simple answer is most people don’t and therefore tend to avoid spending money during “The Golden Years” for fear of running out during “The Later Years”. This can result in unfulfilled aspirations and missing out whilst young enough and fit enough to enjoy them. So, what’s the answer?
Why a Lifetime Financial Plan helps you with retirement planning
‘A “Lifetime Financial Plan” is a detailed, yet simple to understand, analysis of your current and predicted future 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 and investments to ensure your money will last your lifetime (no-one knows how long that will be so we model the projections until age 100). The most important part of producing the plan is an in-depth discussion to identify your aspirations and future plans since they are so individual. We can incorporate the downsizing of your home and any potential future inheritances as well as Care Home Fees and even the demise of a partner, to identify the financial impact on the surviving partner. Finally, we build in the hated enemy of all retirees…… inflation!’
Howard Goodship, Chartered Financial Planner and member of the Ringwood financial planning team continued:
‘Stewart Sims-Handcock, my colleague and Chartered Financial Planner at Lonsdale Wealth Management Ringwood, also believes having a “Lifetime Financial Plan” is critical in helping our clients understand their financial needs and it helps us identify the level of risk required for our client’s investments and savings. We aim to take the least amount of risk to achieve those objectives.’
If this article resonates with you, ask your financial adviser about using a “Lifetime Financial Plan” and read more about Retirement Planning on our website. Our Lonsdale Wealth Management financial advisers are able to produce a plan as a stand-alone piece of work, or as part of a review of your pensions, savings and investments. If you want more information about how we can help you in retirement or you require pension advice please contact us or complete our booking form. We offer a FREE one hour consultation to discuss your retirement needs.
Enjoy your well-earned retirement…… and as my children would say; YOLO (you only live once!).