Do you often find yourself dipping into savings or other sources to supplement your income? Figures suggest over a third of those aged over 55 are living beyond their means. If that sounds like you, it could place the retirement you have been looking forward to at risk.
Whether you are still working or are already retired, you are likely to have plans you want to turn into a reality. That may be having more free time to spend with grandchildren or indulging in hobbies. However, the spending decisions you make now could have an impact on the future.
According to the research:
The figures are part of a trend towards greater financial insecurity later in life. There are several factors that are driving this movement.
First, we are living longer and that means pensions have to stretch even further. It is not uncommon for people to spend 30 or even 40 years in retirement today. It may mean planned annual expenditure is no longer feasible when you consider how life expectancy has changed.
On top of this, Pension Freedoms mean the average retiree now has to take far more responsibility for their retirement income than in the past. Retirees no longer have to purchase an Annuity with pension savings. Instead, they can choose to access them flexibly or take lump sums. This has led to millions of pensioners controlling their income, some of which may be taking too much.
Whether you are planning to take out a loan to renovate your home or are using credit cards to supplement income, it is important to look at the impact it could have on future plans. Whilst expenditure will often decrease in retirement, your income will likely fall too. Managing your spending now can help ensure you are able to achieve the retirement you want.
Overspending as you approach retirement could mean your plans are placed at risk:
Financial planning can help you make sense of your finances now and ensure you live within your means. The process can also help you consider the long term when you make decisions about your spending.
Through discussing your plans, we can help you understand whether spending habits you have now are aligned with these. We can use cash flow modelling to visualise the impact of financial decisions. For example:
Our goal is to help you make the right decisions, considering both the present and future. With the right information, we aim to ensure every client feels confident in the financial choices they make every day.