14 June 2013

Does this match your retirement plan?

Most people only think about their own retirement - and that only happens once in a lifetime so you don't get much chance to practice!

But I deal with retirement issues every day, and I'd have to say that it is worth having more of a plan than most people seem to. So here's some planning thoughts...
You could think of retirement in several main stages: 
Pre-retirement adjustments
Pre-retirement is about taking a look at your life in general and your finances in particular. Reviewing pensions, paying off any mortgage, considering any home improvements, perhaps taking some initial pension benefits like a lump sum to help with that. 
Part-tirement working
Many people don't just stop work all of a sudden. Continuing part time or starting a new low stress part time job is common - hence "part-tirement". Finances don't always allow a full stop, and after all you are probably going to have a good few years left, so there's still time to try something different.
Active enjoyment
This is the stage that many look forward to. Doing more travelling, supporting your family, or volunteering for your favourite charity are common activities. The question is whether the finances are there to support it. If you have any savings or investments it may be worth positioning them to provide an additional income at this stage.
Slowing down
And finally, there's likely to be a less active phase spent initially at home, but potentially in residential care. And that's certainly where some earlier financial planning is needed due to the costs involved.

So what's the plan?

One approach is to do some "lifetime cashflow planning". That can be a simple view on your finances, showing income / expenditure / assets for each year of potential life remaining. Things certainly won't turn out the way you initially plan, but it does enable you to take some informed decisions about what you are likely to be able to spend at the different stages.
Here's an example - let me know if you want help with your version! ...

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