Consultants, Doctors & Dentists - How much money do you need to retire?
Posted June 11th, 2009
Many people and surprisingly many financial advisers guess at how much money is needed to live comfortably in retirement.
The actual answer might surprise you. Finding this out sooner rather than later enables action to be taken. A Lifetime Cash Flow Forecast could be the key.
So, how much is enough?
Firstly, what does retirement look like to you? What do you want to do in retirement that if you were unable to do it would leave you feeling disappointed. Is it holidays, golf, or visiting family? Perhaps it is the purchase of a one off item, such as a boat or holiday home.
Whatever these goals are (and they could be anything) you need to set them down first. Once these are set in place, planning on how to meet future income and capital expenditure can then be assessed.
It is vital to set out what expenditure will be and how this might change over time. Basic expenditure may not fluctuate too much over time (except by inflation) and any extra spending will often be determined by your goals and what stage of retirement you are in.
The three phases of retirement
I like to think of retirement in three main phases.
1. The Golden years – these are the years when your health is good and therefore taking the opportunity to enjoy life is vital. Income needs are correspondingly high.
2. The Conservatory years – these come later when perhaps energy levels are lower and a more sedate lifestyle is required. Income typically reduces from phase 1.
3. The Later Life years – this is the stage when health is failing and more income may be needed to provide for health and care issues. Income needs can increase.
What do you think? What I truly believe is that by factoring the changes in spending patterns over these periods provides the key to successfully meeting your goals.
Lifetime Cash Flow Forecasting
A Lifetime Cash Flow Forecast provides a snapshot of your financial health now. It will determine whether your income and capital needs are met and therefore, highlight whether your goals are realistic. From this starting point the advice process can begin to truly add value by either planning to reach your target or protecting you from ever missing your target.
If you would like more information on answering the big questions or feel that you would benefit from this approach, please call us on 01204 663904 or contact us by email on advice@themedicalifa.co.uk