How much money do you really need for the rest of your life?
The fact is the majority of people have no idea where they are heading financially. They may have assets, investments, and/or high levels of income, but most people have no idea what it all means, or what sort of financial future awaits them.
On the one hand they don’t want to retire too early, only to discover their money runs out. On the other hand they don’t want to retire too late and end up working when they could have been playing! Then again, because of savage taxes due on death, they don’t want to die with too much money..but they’re afraid to spend it or give it away!
What we all need to know is “How much money do I really need for the rest of my life?”
If your adviser is a Lifestyle Financial Planner, they will use sophisticated software to enable them to crunch all the numbers and help you to ‘see’ what’s going to happen to your ‘bucket’. This will be based on prudent assumptions.
If you are like most people, once you see this for the first time you might be amazed! You might see opportunities you never knew were there. Perhaps you’ve been worrying about money, when you needn’t? Perhaps you could retire years earlier? Perhaps you can afford to spend more now? Perhaps you can afford to give money away?
Or, perhaps you might need to save or invest more? Perhaps you might need to achieve better return on your investments? Perhaps you might need to address certain expenditures?
Or perhaps you can afford to take less risk? Perhaps you could work less?
Perhaps you could plan a career change? (I love that saying by Lily Tomlin: ‘The trouble with the rat race is, even if you win, you’re still a rat!‘) Perhaps you could quit the rat race?
Perhaps you can afford to work because you want to, not because you have to?
Perhaps retirement for you doesn’t mean giving up work? Perhaps you could build into your retirement plan work that will bring or continue to bring more meaning to your life?
Perhaps you can start earning money from doing what you love? Perhaps you can plan on bringing in a ‘play cheque’?
If you’re a business owner, for example, this exercise could help you work out your ‘Number’ – how much you need to sell your business to secure your future, In fact, this exercise could help you create a better plan for your business – or refine your exit strategy!
Whatever the outcome, your Lifestyle Financial Planner will be able to work with you to tailor your financial planning so that you feel confident about where you are heading financially. They will also show you how changing your assumptions and requirements can change projected outcomes. They will help you ‘stress test’ the assumptions, always erring on the side of caution. This process will give you more confidence and clarity about where you are heading financially which in turn will give you more peace of mind.
Over the years ahead, as your confidence in the financial planning process increases, on an ongoing basis – and whenever the need arises – you and your adviser will review your financial planning to ensure you are on track. This will enable you to consider opportunities that may arise such as: “What if I can retire five years early?” or “Could I spend that extra £10,000 a year for the next ten years?” or “What if I died? What would happen to my family’s bucket?”
The purpose is to help you confidently create a long term spending (or saving) plan that will keep you on course so you can achieve the life you really want, without fear of running out of money – or dying with too much!
That is PROPER financial planning.
Above extract taken from Paul Armson’s book titled: “Enough? How much money do you need for the rest of your life?”
If you’d like to know more, give us a call or send us an email and we’ll schedule some time to chat with you.