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Why a fantastic retirement plan is as much about values as it is about money

When it comes to planning your retirement, there are two main questions you need to answer.

  1. How are you going to spend your time?

  2. How are you going to pay for it?

The thing is, you can’t answer the second question without fully exploring and answering the first!

The truth is that people probably spend more time planning a two-week holiday than they do a 35-year retirement.

In our experience the lifestyle benefits of work – the social aspect, the purpose it gives to your life –are much more beneficial than the economic benefits. Yet, we tend to overly focus on the money side and what you are retiring from. When you retire, it’s important to consider how you replace the lifestyle benefits of work and ensure you retire to something, not from something.

Your retirement plan is in danger in the early years

A retirement plan is in most danger in the first few years. This is not only from the well-documented “sequencing risk of return” dynamic but, more importantly, from yourself.

For example, divorce rates of couples that are newly retired are significantly higher than the average. The dynamic of the relationship with your spouse changes, as most couples want slightly different things and this needs to be discussed, explored, and prepared for.

If you retire from the corporate world, you may have built up a great reputation. When you retire you may therefore be presented with many part-time or consulting opportunities that conflict with your desire to spend time wisely.

With no plan in place to understand how much is “enough” and what financial independence looks like, you make take these opportunities and waste your precious time.

Exploring your aims and needs is the key to a great retirement plan

Understanding your needs and giving you the airtime to explore and establish what you want from your retirement is so important in establishing the foundation of a great retirement plan.

We sit down with our clients for as long as it takes to question, understand, and challenge their goals, dreams, and fears. If, as a team (planner and client) we put the groundwork in up front, you will reap the rewards later. We can help you to keep on track and to adapt your plan as your circumstances change.

Because we take our time to understand your values, when life moves forward and priorities change, we can ensure any decisions taken are in line with what’s truly important to you.

Forecasting your financial future

This brings us onto cashflow forecasting. There are many great cashflow tools out there, but they are just that… tools.

These tools help us to determine what your future financial position will look like. Using projections for the values of pensions, investment, and property, and making careful assumptions about your future income needs, inflation, and investment growth, you can see what your finances will look like in 10-, 20-, or 30-years’ time.

Seeing in black and white that you have “enough” can be a powerful and transformative moment. Learning that yes, you can retire early and that you’ll be able to maintain your standard of living in retirement can be life changing.

However, cashflow planning without considering your values and aims can lead to a bad outcome.

If cashflow modelling shows that you can retire without worry about running out of money, but we haven’t explored a variety of numerical, physical, lifestyle and psychological scenarios with you, we could be putting your retirement in danger.

Our experience tells us that there will be a number of surprises along your retirement journey. So, we’ll take the time to impart this wisdom, minimise the unknowns and be there for you to remind you of your values when the surprises come along.

A cashflow forecast in isolation can’t show and deal with these surprises, changes, and unexpected events.

How we helped a client to stick to their retirement plans

In retirement, you will often be pushed and pulled and in conflict with your values. Here’s a recent example.

Our client was a successful CFO and retired in January. We talked at length about him and his wife retiring to a life of more freedom, less stress, and more time to travel. We also established that money was important to them because it gave them the opportunity to give back to and “get their hands dirty” with causes and projects they are passionate about.

We also considered how his reputation resulted in him getting inundated with opportunities for work, which he could earn very well from. We talked about how this would make him feel, and why it was important to make sure that whatever is presented to him doesn’t conflict in any way with his values and retirement aims.

And, as if by magic, in February exactly this happened! An opportunity presented itself to earn good money for a few hours’ commitment per week. Without a plan and prior preparation, it would have been easy to take this and put his true values at risk. It’s better to prepare than repair!

In the words of our client: “TFP encouraged me to remove the (financial) shackles so much so that I turned down a part-time opportunity which would have been easy to take but, in actual fact, not what I really want to be doing.”

Our role is to challenge you when something looks likely to affect your goals and aspirations, and to be a sounding board when considering options that might look attractive but could stand in the way of you achieving the lifestyle you want.

Get in touch

If you want to find out how we can help you plan the perfect retirement, please get in touch. Email or call us on 01621 851563.


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