Planning for a long and happy retirement

And one of the problems with planning your retirement is that none of us know how long it will last.

Many people underestimate how long they’re likely to live. According to the Office for National Statistics a 65-year-old man now has a 50% chance of living to 87 and a 65-year-old woman a 50% chance of living to 90.

So, retirement can last a very long time. And the longer your retirement, the longer your retirement income needs to last.

You might plan to retire gradually and work part-time before stopping completely. But there will come the moment when you lose your main source of income and must rely on your pension pots, savings and investments and any other income you might have from, say, rental income.

You will also be eligible for your State Pension once you reach your state pension age. If you have paid your National Insurance for 35 years you will be eligible for the full entitlement. In 2018-19 this is £164.34 per week, which is just £8,546.20 a year.

Most people will find that some of their regular costs will fall when they retire. They won’t have any commuting expenses or a requirement to pay pension or NI contributions. They may also have paid off their mortgage and their children may be financially independent.

However, other costs may go up as you may want to spend more time on hobbies or on holidays. If you can, it might also be sensible to put money aside to pay for long-term care.

By the time you are ready to retire you will probably have developed a pretty sound financial head. But keeping up with all the tax implications, pensions legislation and accurately measuring your net worth and current and future financial situation can be mind-boggling.

Chadney Bulgin’s Cashflow Modelling software can help you make sense of this. Call us on 01243 532161 or email [email protected] and our experts will give you all the facts you need to make proper considered financial decisions.