How to make sure your money lasts as long as you do…

Not everything in life can be mapped out with a calendar of dates and a spreadsheet of facts.

We can’t dictate when we arrive into this world and nature chooses for us not to know when we will leave either. Life can be seen as a working holiday, hopefully with enough money saved over the years to enjoy the break at the end.

It is a lovely idea, but anyone who has ever overspent on the first few days of a trip away will tell you that there is nothing more miserable that running out of money before a holiday has ended. Sipping water in your room whilst the cocktails and party carries on in the bar below without you can be an overly sobering experience.

The same can be viewed with retirement; if you are to enjoy a financially secure retirement then you need to make sure your money doesn’t run out before you do, or before life’s holiday ends.

3 ways to make your money last as long as you

Start with a plan

When it comes to retirement planning, educated guesses need to be made about how much income you’ll need and what your portfolio will earn. But the most crucial unknown is how long you will live, and therefore over how many years your savings will need to stretch. According to the office of national statistics, the average life expectancy for a man in the UK is currently78.9 years, whilst for a woman it is currently 82.7 years. If you’re healthy and have long-lived parents then the chances are that you could reach these average ages. To have enough income at that stage of life requires serious saving now. Considering average life expectancy can provide a starting point for financial planning and working out how much you need to save for retirement, and for how long you may need that income.

Cover all the options at retirement

Broadly, the rules surrounding how you can take your pension income at retirement changed this year and will become more flexible in 2015. The aim of the Chancellor is to give people more freedom and choice as to how to manage their money, and this means enabling the public to access their pension savings at retirement, should they wish. What we are expecting to see in the coming years is a change in the way in which many people manage their money at this point in their life. It is anticipated that fewer people will buy an annuity at retirement, which provides a set and regular income for life but often ceases when the owner of the policy dies, and more people will chose to continue to invest their money in order to provide an income. The key is to take financial advice for retirement so all of the options can be understood, and you can make the right choices for you and your family.

Keep moving

Studies have shown that when you stay healthy and active you are far more likely to avoid expensive medical problems, not to mention long-term-care costs. The NHS recommends that adults aged 65 or older who are generally fit and have no health conditions that limit their mobility should be active daily and should do at least 150 minutes of moderate-intensity aerobic activity such as cycling or fast walking every week, and muscle-strengthening activities on 2 or more days a week. Investing into your health and well-being during retirement can help to reduce your need for assistance with living and mobility costs in the future, and potentially delay your long-term health care needs.

To speak to a Wealth Planner at Sanlam about retirement planning email letstalk@sanlam.co.uk.  

http://www.ons.gov.uk/ons/rel/subnational-health4/life-expec-at-birth-age-65/2006-08-to-2010-12/stb-life-expectancy-at-birth-2006-08-to-2010-12.html#tab-National-Life-Expectancy

http://www.nhs.uk/Livewell/fitness/Pages/physical-activity-guidelines-for-older-adults.aspx

This article is for information purposes and should not be treated as advice. Individual circumstances should always be considered prior to purchasing any financial products. For further information please contact your Wealth Planner.

Sanlam is a trading name of Sanlam Wealth Planning UK Ltd (Reg. in England 3879955) and English Mutual Ltd (Reg. in England 6685913). English Mutual Ltd is an appointed representative of Sanlam Wealth Planning UK Ltd which is authorised and regulated by the Financial Conduct Authority.