Your Money or Your Life.

This morning I walked my daughter to primary school for the last time. Starting next term, she will be at secondary school and getting the bus.

Where did that last year go? Sigh.

I’m sure like me, you all remember how, as a kid, things like birthdays and Christmas and school holidays seemed to take forever to come around and now, as we all get older, they fly past at an alarmingly faster and faster rate.

Time and tide wait for no man, as they say and yes, you guessed it, I am about to go on about funding your retirement years. If you don’t do it, they ain’t going to happen, you’ll just keep working. You certainly can’t trust the governments of the world to take care of you properly any longer, that’s for sure.

I read a report a few months back which questioned what level of income one would need in retirement and whilst the details escape me, the conclusion the writer came to was that the relative amount required decreased, let’s say each decade, as you become less able-bodied. So assume you retire at 65, the first ten years you might want an income close to what you had prior to retirement but from 75 to 85, you might need quite a lot less and from 95 onwards, who knows? but bear in mind, medical advances have us all living longer and longer.

Quality of life means different things to different people, some want to travel the world, others, like me, just want to spend time at home, family time and selfish pursuits combining to create utopia. But what does this cost? How long is a piece of string?

What I do know is this. The earlier you start, the better off you will be.

Einstein famously said “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”

It’s not so much about interest is it, these days? The Zero Interest Rate Policy (ZIRP) of governments around the world and even negative interest rate policy in Europe (NIRP) means that we can’t rely on yield from 100% safe government bonds anymore, this is not Jane Austen’s time. Life was simple then and maybe if time travel where invented we could live and earn 21st century money and retire to simpler times.

So, how do you know if you are on track? Financial modelling can tell you a lot; we are all different, we all have different assets and liabilities, aims and objectives, income and expenses.

I recently put all my own details into a financial modelling tool that I recently acquired and was pleasantly surprised, I’ve since done it on clients confident that they were well advanced in their planning who were shocked to see serious shortfalls. It’s not about how much money you have, many of my clients are far richer than I am, (I’ve got seven kids and two grandkids, enough said) it’s more about managing expectations and though my wife doesn’t know it, I plan to take it easy when I retire and sit by the proverbial fire with pipe and slippers at the ready.

How about you? 

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