December 6, 2023

Key questions to ask when planning for financial freedom

How much do I need to retire? Or, how much do I need to plan for financial freedom? This is probably one of the most common questions we get asked in our meetings with potential clients. And the truthful answer is: how long is a piece of string? How much you need to retire is completely personal. It is dependent on the lifestyle you want to lead in retirement and what you’d like to do once you stop earning.
The traditional idea of retirement is in decline, and more people are tending to work part-time, consult or do project work before they stop completely.
The question really is what does financial freedom mean to you, and potentially, when can you say, I don’t have to worry anymore about working?
Where do I start?
The first thing to do is figure out what you have at the moment and build a personal balance sheet. Take a look at policies that you are paying into or already have in place. Find out what your expenditure currently looks like, question whether you will regret any of these expenses, and wish you had saved that money to bring you better pleasure later in life. Consider whether you will continue to spend in this way in the future.
Ask yourself how much will I want to spend?
How much you want to spend in retirement depends on what sort of lifestyle you want to lead.
Retiring doesn’t necessarily mean you’re going to spend less, you are going to have more time on your hands, so you may decide you want to travel more or give your experience to start-up companies for example. It’s important to also consider factors such as whether your mortgage will be paid off or if your children will have left home. Start thinking about what retirement means for you and work out how much that is going to cost.
Am I currently on target?
Once we have worked out what you’d like from your retirement and what you’ve got, we need to put these together. One of the best ways to do this is to use cash flow modelling software. As financial planners, we can work out the value you are really going to get from your private pension, savings, property, and other investments. This helps us to create your financial plan. We can put together a projection to see where you are now, and, if you were to make no other changes, whether you are on track to meet your retirement goals. If it turns out you are not quite on track, this is an opportunity to work out if there is a better way of spending your money, and if there is anything you can change in the future that will give you a greater reward.
How do I keep on track?
It is important to remember that once you have created a financial plan it’s not something you can put away. When you retire, some of this money will need to be invested or managed for 20 to 30 years. So, it’s not something you can put in a drawer and forget about.
It’s about refining the plan, making use of allowances, ensuring you make use of the tax breaks available and building up that future you really want.
If things change, for example, regulations, legislation, or if you have a personal change, it gives you the chance to refine that plan and keep yourself on track to give you the retirement, or financial freedom, you really want.

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