How much is enough?

July 19, 2019

Focusing on fund values and percentages is pointless unless you know how much you need to enjoy life free from financial worry, says Christine Fox, financial planner at Joslin Rhodes

Joslin Rhodes is a firm of independent pension advice and retirement planning specialists and often, when clients come to us, they’ve been putting off planning for the future for years. Usually, they’re either scared of finding out they won’t have enough money or have tried calculating the figures themselves and they looked bleak.

But many people do have enough; they just don’t know what enough means for them.

To explain how to calculate the financial future you want, here’s our three-step guide to better financial planning.

1. The usual suspects – isn’t it a simple calculation?

Most people calculate how much money they’ll need in retirement by working out how much they have, how long it needs to last, and dividing one from the other.

So a calculation might look something like this: let’s say you’re 55 and think you’ll live to 80; you have around £250,000 and therefore need £10,000 a year to live on.

Sounds reasonable.

However, all this does is give you a limited lifestyle which may not account for many important factors…

2. Things you didn’t consider – what about inflation?

Every year, costs rise and outgoings go up. To maintain the same lifestyle as today you need to factor this in. Then there’s whether you want to live the same life for the next 25 years? For most, costs are different in their active years to their later ones. Holidays abroad become UK holidays, that golf club membership becomes ‘pay-to-play’. And finally, what about those big one-offs? Why have you worked all your life if not to buy that dream car, take that holiday you’ve been promising yourself, or finally get the kitchen sorted? If you give yourself a fixed sum, you’re not allowing your life any flexibility and denying much of what makes it worthwhile.

3. A better way – so what’s the alternative?

Start by looking at what ‘enough’ money looks like for you.

At Joslin Rhodes we do this using our unique PlanHappy process, which asks things like – ‘enough money for what?’

For you, it might be spending time with the family, enjoying the garden, or scuba diving in Australia.

It’s only when we know what your ideal lifestyle looks like can we calculate how you’re going to fund it and answer the question of whether you have enough.

Essentially, good financial planning is about moving money around your timeline – so it’s in the right place when you need it to get the lifestyle you want.

By doing this, you’re allowing yourself the flexibility to enjoy the retirement you want, instead of limiting yourself.

After all, why have you worked all these years if not to enjoy life?

Joslin Rhodes
For further help on how to PlanHappy, call the Newcastle office on 0191 249 3828, Stockton on 01642 04 4914, or email hello@joslinrhodes.co.uk
www.joslinrhodes.co.uk
Joslin Rhodes is authorised and regulated by the Financial Conduct Authority and holds the additional permissions to advise on Defined Benefit/Final Salary pensions.

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