Retirement Cashflow Planning
How can anyone know the right time to retire unless they have a clear idea of their expenditure and a final salary pension scheme that will pay exactly that amount. There was a time when you could retire at 65 knowing that the combination of employer pension and state pension would pay you nearly as much as you were earning the day before.
Before we get too jealous of the generations that went before, we should also remind ourselves that retiring in 1976 you would have had a life expectancy of only a few more years. When the state pension was originally introduced, it was very rare for anyone to live long enough to claim it.
These days we are generally living longer and healthier retirements but with less guaranteed income on average. This means that we have less certainty and need more planning.
The biggest hurdle to planning a client’s retirement remains a lack of awareness of their expenditure. There can be many reasons for this; maybe you tracked expenditure very closely when money was tight but less so in the later years of work when things became easier or maybe what you spend now whilst working is very different than what you are likely to spend when retired.
Whatever the reason, a small variability in expected and actual retirement expenditure can crash a plan in a few short years. So, it is crucial to examine the bank statements (or these days the Insights function in your banking app) to get a sense of your regular expenditure. On top of that, the irregular capital items for holidays, hobbies, and gifts to children/grandchildren.
Retirement cashflow planning is available to Altor clients in our Core and Discounted Services.
Nothing on this website or its links constitutes a personal recommendation; the information contained is designed to be informative but not to be relied upon as individual circumstances could affect the relevance of this guidance.