Reviewing a retiring figure

Andrew Sutherland | Supplied

Q How much is enough for my retirement?

A As a chartered financial planner, this is a topic my clients and I wrestle with on a regular basis –particularly at the start of a financial planning relationship.

There is greater flexibility than ever before for those saving for, moving into, and living through retirement. While positive, it can pose challenges too.

Prudent planning can often be supported by working alongside a qualified and experienced professional. Great financial planning aims to ensure you will run out of life before running out of money – not the other way around.

Regularly, people try to attach a specific number to the capital required to sustain a retirement. The truth is that everyone’s retirement will be different with the three main considerations being:

Desired Lifestyle - What do you want to do in retirement?

The majority of hobbies or interests will cost a certain amount of money. Everyone’s desired lifestyle is different, meaning the total sum you will require will be specific to you.

Other sources of income

Have you checked your State Pension entitlement? Do you have defined benefit incomes to rely on, or rental incomes? Further to that, do you plan to release wealth from your home in a future downsize?

How long you live

No-one knows how long we have left, and so it is impossible to estimate with any degree of certainty the period over which we will need to cover the cost of our lifestyle.

Everyone’s number will be different. If your spending needs are modest and you have strong income sources in place, you may not need a large amount of capital. On the other hand, if you are largely reliant on investments throughout retirement, it is likely those investments will need to work harder for you.

How long we live depends on a range of factors and varies from person to person. In the UK, average life expectancy is around 78; however, the most common age at which people pass away is 87. This is a significant discrepancy and those with greater wealth, access to better medical care, a better living environment, and the ability to cease work earlier than others may live longer than the average retiree.

A financial planner is there to support you in establishing what is important to you and to think about how you want your ideal retirement to look. That will then give the foundations for a robust financial plan with reasonable provisions in place, meaning you don’t need to consult government statistics – you can get on with saving for or enjoying your dream retirement with confidence.

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