Retirement is a landmark moment in anyone’s life, and it’s a time that prompts a lot of questions, particularly around your personal finances.
Planning for and successfully transitioning into retirement are two things we help our clients do every day at Cooper Parry Wealth. So, in this blog, we’re exploring some of the most common concerns and, importantly, how you can overcome them and approach retirement with complete peace of mind.
RETIREMENT: COMMON CONCERNS & CHALLENGES
Change of mindset
You’ve been saving all your life, and now, suddenly, there’ll be no new money coming in. Instead, you’ll need to start drawing down on your asset base, and it’s this shift in mindset, from saving to spending, that’s often one of our clients’ biggest worries.
Do you have enough money?
If you do opt to retire, will you be ok financially? How much is enough? Inflation rates have been a big topic over the last few years, and although the UK’s inflation rate recently hit its 2% target, if they were to surge again, the decreasing purchasing power of cash could add complexity to your retirement financial plan.
How long are you going to live?
The average life expectancy has increased significantly since the 1900s, and now, it’s not uncommon to have three decades of your life to fund after you’ve retired. That includes living expenses, medical or long-term care, and a new car every few years. What about any unexpected emergencies too? All of these need to come from your retirement income and/or your pension and investment assets.
Where should you draw money from?
The historical view was always your pension funds your retirement. Today, the landscape has changed, especially for high net-worth people. Pension legislation is set to keep changing in the near future, too, and having an expert in your corner to help you navigate those changes brings great benefits.
If you’re drawing on your investment portfolio, the timing of the withdrawals may affect your ability to realise your dream retirement. Withdrawals whilst investment markets are negative (or even flat) can harm your longer-term returns and potentially the big plan. This is known as sequencing risk and can be most costly in the early years of retirement. For that reason, a lot of retirees live in fear of market declines and volatility.
RETIREMENT: HOW FINANCIAL PLANNING CAN GIVE YOU PEACE OF MIND
Planning ahead
As with any form of financial planning, the earlier you start discussing your retirement plans, the better. When would you ideally like to retire? Perhaps you’ve received a bonus and have some surplus cash? What do you want your first few years of retirement to look like?
Cash flow modelling
Cash flow modelling is a fantastic way to visualise your financial future, and it’s something that puts a lot of our clients at ease. Even if you spend more than planned, or your investments don’t perform as well as you’d hoped, cash flow modelling can help you plan for changes, or show you how changes could impact you. We revisit this every year, adapting it accordingly, so there are no nasty surprises.
It’s also an important step in working out whether you have enough, too much, or not enough money for the rest of your life – all of which require specific lifestyle financial planning and advice.
Structuring assets correctly
Working with a financial planner can help you structure your assets appropriately to ride out periods of volatility in markets, reduce sequencing risk and be tax-efficient.
A coach in your corner
We coach clients through retirement and provide structure to help you make the transition as comfortably as possible. Having an expert in your corner can be invaluable, before and after retirement. We’ll help you make sure you’re doing everything tax-efficiently, regularly revisit your financial plan so it stays relevant, and adapt it based on any new dreams, objectives, or major events.
Making life count
The most important thing, and something we hold above all else at CPW. If you’re planning or heading into your retirement, knowing what you can achieve with your money is priceless. That’s the real value of financial planning, and whether it’s bucket list holidays, helping out your family, or a big purchase like a holiday home or a new car, it’s something we love helping our clients bring to life.
This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action.
Past performance can’t guarantee what investments will do in the future. The value of a portfolio can go down as well as up, so there’s a chance you’d get back less than you put in.
Cashflow planning, tax advice and estate planning advice are not regulated by the Financial Conduct Authority.
