Retirement Planning

Me and my husband are considering retirement but need to know what sort of income we will get and need

This is a common query.?It is the natural starting point when considering retirement and, unfortunately, the correct answer isn’t as common and is dependent on your circumstances.

According to research undertaken by ‘Which?’, a couple need an annual income of ￡26,000 for a comfortable retirement. For a ‘basic’ retirement, the research suggests ￡18,000 for a couple (this was in 2021, so increases in living costs will likely increase this).?

We encourage and help clients to look at their current expenditure, but also consider what changes might occur in retirement (i.e. reduced fuel costs, initially increased holiday costs). Such analysis should be broken down between essential income, which would include utility bills, loan/mortgage costs, food etc. and discretionary income which would include holidays, going out and hobbies.

Once you have some figures, planning can commence, making sure you have funds to cover projected expenditure throughout your retirement. This doesn’t just have to be from your pension funds, but also consider any State Pension entitlement (and the timing of this), and other assets, such as ISAs, that could be used to boost your income.

You also need to consider any variances to your needs including inflationary increases and changes to your asset base. A strong ‘cash flow modelling’ exercise can help show what can be realistically achieved. This should map out the coming years based on a number of achievable assumptions to show what level of sustainable income could be attained or when your assets may run out.?????

Cash flow modelling is an important base for retirement planning, and it is something that should be scrutinised annually to make any necessary updates/changes. As it is based on assumptions, it should not be treated as fact, but rather an idea of what might be possible.?

You should consider contacting a financial adviser who can produce cash flow modelling for you, and who can also make recommendations on your existing arrangements. An ongoing relationship with them can also ensure the plan remains up to date and as accurate as possible.