Can I afford to consider retiring early?
So you’d like to consider retiring early or perhaps cut back your hours in the next few years but you’re not sure if you’ll be able to afford to? Of course everybody’s circumstances are different but there are some relatively simple steps you can take now to help you answer this question and more importantly to help you answer it by saying, “Yes, I can afford to retire early”! It may mean you can retire tomorrow or it may mean you can spend the next 10 years without the added strain of not knowing, worried that you won’t be able to make ends meet. But either way, by dealing with these issues now, today, you have a much better chance of achieving what you want and will enjoy all the benefits that come with peace of mind.
Life planning
The first step is to take the time to do some in depth life planning and you may be surprised at how important and cathartic this process is. You’ll need some help because it’s about looking deeply within and establishing what you want your future life and retirement to be like. It’s not just about the money although of course that is a significant part, but it is also about unearthing what it is that will allow you to feel fulfilled and satisfied in your later life.
With the help of an expert, you may find all sorts of unexpected issues rise to the surface as you plan your future, such as providing for dependents, what you want your legacy to be or an unexpected insight into what your perfect retirement looks like.
Collating the information
The next important step is to collate a clear and accurate picture of your assets, liabilities, income and outgoings. Do you still have a mortgage? Are there any debts? How much does it cost you to live? What about your pensions, investments and savings? What, if anything, will your future income be, from what sources and in what capacity?
In the hustle and bustle of daily living it’s remarkably easy to lose sight of these things and how they fit in to the bigger picture.
Lifetime cash flow planning
There should be nothing hit and miss about planning your retirement and we recommend cash flowing planning as an integral part of working out what you are going to need in the future.
Good cash flow planning isn’t something you can do at home on the kitchen table.
It involves having the proper software and working out your expenditure, in order to forecast what your future needs will be. Cash flow planning should also be able to factor in all sorts of different contingencies and that in turn informs you of what you can afford to spend now, what income you’ll need in the future and what tweaks you need to make to your finances in order to have the lifestyle you want in retirement.
A proper review of your assets and investments
Cue a really good financial adviser who, armed with the information gathered above, will be able to assist you in valuing your assets, investments and pensions (both now and for the future) and help you make those all-important adjustments to make sure they provide the returns you need or require to realise your plan of retiring early.
The information gathered as part of the life planning work is crucial here as it will have helped you answer all sorts of questions such as what to do with your pension, how quickly you may need to access funds, what your shorter term purchasing requirements may be (buying a new car / going on that once in a life time holiday) and any longer term needs such as making provision for your own care and mitigating tax liabilities. And your financial adviser’s involvement should be part of an ongoing process with regular monitoring of your assets to ensure they stay on track.
Next steps
So if you really want out, start putting the wheels in motion now. At Juno Wealth we believe you need all the above ingredients in order to make sure of your future.
Tracey Evans is an accredited and experienced Life Planner as well as a Chartered Financial Planner and Independent Financial Adviser. Our extensive lifetime cash flow planning reports illustrate your financial lifestyle, your cash flow and the effects that this has on your net worth over time. They help you to shape your thinking about your planning needs, in conjunction with sound, secure and prudent independent financial advice from us, about the options available to you.
