I read with interest an article about individuals spending habits as they move through their ‘retirement years’.
The article states that as people move towards their 80’s their spending can increase and, as a specialist adviser in later life planning, this is something I have witnessed first hand.
When talking to clients about their plans in retirement they state that, whilst they “still feel active” they wish to travel and this can be the main driver for the increase in expenditure. People want to “do more” and enjoy spending time (and money!) with their families.
When individuals start to approach their 80’s their spending can slow down, they may not be as active as they were (although I have plenty of clients who do not fall into this category!).
The type of expenditure can then start to change, for example people may need help around the house or possibly have to pay for care.
This shows the importance of the “Can I afford to retire?” question. In order to evidence the affordability of a client’s retirement plans we undertake a comprehensive cashflow planning exercise. We build in the estimated fluctuations in expenditure to help demonstrate to a client how much they can afford to spend and how sustainable it is.
The current increase in cost of living will have an impact on individuals spending habits in retirement. This emphasises the importance of planning your expenditure through retirement but furthermore, the importance of ensuring this plan is regularly reviewed.
In addition, individuals may have various pots from which they can draw their income from so it is very important that income is taken in the most tax efficient way possible. Again, this demonstrates the importance of regular reviews.
If you are looking to retire and want to understand whether this is affordable to you please contact me for an initial, no obligation discussion. This is at our cost and a chance for you to understand what we do and how we help our clients through their retirement years.