Maintaining Your Lifestyle In Retirement

Analysing cashflow and budget in preparation for retirement can be an enlightening experience, advises Wayne Hayhurst of Raymond James, Ribble Valley

Retirement is an exciting milestone that many approach with great anticipation. However, very few people can say they feel confident that their savings will allow them to retire comfortably, or even what retirement looks like to them from a financial perspective. Many entering their retirement years, experience uncertainty and anxiety, especially regarding money.

The good news is that there are ways to maintain the retirement lifestyle you dreamed of and enjoy the fruits of your labour. The qualified and approachable team at Raymond James Ribble Valley based in Longridge will work with you to get the important decisions right.

The process begins with you and your financial adviser understanding what is important to you now, what you want to achieve and what your ‘golden years’ might look like. Together you will assess and clarify your current budget, assets and planned future expenditure. This information is used to ascertain if you are ultimately on track or if you might need to save now to achieve your desired retirement goals.

Wayne Hayhurst, Branch Principal at Raymond James, Ribble Valley says: “The budgeting process includes budgeting both during your accumulation years so that you can save appropriately, as well as in your retirement years so that you can maximise your distribution years. All our clients receive a detailed cashflow model, using comprehensive financial modelling software. While the software can help answer the big questions such as ‘How much do I need to save?’ or ‘Do I have enough money?’ for many it can also be an enlightening experience to help them gain the confidence to spend their money in retirement, without the worry of it running out.”

The first step in protecting your retirement income is to fully understand your income sources and what strategies can make them last even longer.

Reliance on assets for retirement income will vary from person to person, given that many will have various guaranteed incomes such as a state pension and/or workplace pension(s). While these can form the basis of your retirement, other assets such as property income, ISAs, building society accounts and investment funds can be used as supplements to help achieve your desired outcome. These latter income sources often require more of an active plan to ensure they are sufficient to withstand the next 30+ years of inflation, varying interest rates and different market conditions.

The next step to any financial plan and ultimately one of the most important, is to ensure any investments you have, are managed in line with your risk profile and with your financial goals in mind. The team at Raymond James do this using their holistic investment approach tailoring each portfolio to you and ensuring your investments are spread across various asset classes, geographies and industries, to reduce volatility while your money works for you.

In planning for your retirement, there are crucial factors to consider:

1. Understanding your day-to-day living costs in retirement and how these may change over time, particularly with the impact of inflation.

2. Managing risks to your investment returns. Recent years have highlighted the volatility of returns that derive from investments. If the market drops substantially, you run the risk of prematurely depleting your retirement savings. Adding inflation to the mix only compounds the risk of running out of money. You can help reduce this risk by mapping out your retirement and ensuring that your investments are managed with your own goals and timeline. Annuities may provide security when volatile markets and inflation threaten retirement savings. Exploring annuities, government and corporate bonds or other savings products with guaranteed income features may be a useful allocation of a portion of your assets.

3. Assessing the impact of long-term care. Developing health problems can be another risk for retirees. If those health problems require elevated levels of care, such as assisted living, home healthcare services, or any form of long-term care, then basic living expenses will increase substantially. This may involve setting aside more money for retirement or opting for long-term care insurance.

4. Tax planning as you navigate your changed circumstances. Pension income (including state pension) is taxable and other factors to consider may include capital gains and inheritance tax. How, when and how much you draw down your pension has tax implications, in particular with respect to tax-free lump sums.

5. Deciding how to pass on your wealth to future generations. For many, this is the desire to ensure their estate is tax-efficient, but for some, it is a desire to see their loved ones benefit from gifts, perhaps to help with house deposits, school fees or business start-ups.

Financial planning for retirement can present some challenges. These challenges come from unknowns, ranging from life expectancy, inflation, market conditions and even the viability of the state pension, to the constant but ever-changing regulatory and tax environment. Our parent company Raymond James Financial Inc. was founded in 1962 and has just posted its 145th consecutive quarter of profitability, with over $1.45 trillion of assets under management (as at 31st March 2024). As part of this global firm, the Longridge team puts you, its client, at the heart of everything it does. It is never too early to start planning your retirement finances. Call the team at Raymond James Ribble Valley and see how we can help you maintain the lifestyle you are working so hard for.

Risk warning: With investing, your capital is at risk. Opinions constitute our judgement as of this date and are subject to change without warning. Past performance is not a reliable indicator of future results. This article is intended for informational purposes only and no action should be taken or refrained from being taken as a consequence without consulting a suitably qualified and regulated person. Tax treatment depends on an investor’s individual circumstances and may be subject to change.

Raymond James Investment Services Limited
8 Berry Lane
Longridge, Preston PR3 3JA
01772 780300
ribblevalley.raymondjames.uk.com

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