If you are within five years of retirement, you may have several concerns about what the future holds.
According to recent research by US investment giant Schwab, there are three things about money that “overwhelm” people at this critical point of transition. Unsurprisingly they are concerned about the prospect of running out of money in retirement. This fear applies to a substantial majority of people with 72% in the survey worrying about this potential problem.
Of course, sensible wealth planning can help alleviate some of this concern. Having a wealth plan that examines how much income you will have from various sources and how that compares with your expenditure, both spending on the essential items of daily living and discretionary spending, will demonstrate if this is indeed a concern you need to have.
Not running out of money in retirement is a crucial concern we find amongst our clients. Working out how much money might be spent in retirement was a concern that 52% of survey respondents had. So, some forward budgeting seems to make sense. After all, you may have plans to spend some of your retirement on such things as spending more time with family members or travelling for holidays.
The taxation system seemed to present a problem as well, with 54% of survey respondents concerned about “managing the tax implications of withdrawing from multiple accounts”. Sometimes referred to as the “income batting order”. You might wonder which order you might access income from such things as pension plans, cash savings or ISAs.
Interestingly, the typical concern around the sustainability of income being withdrawn didn’t feature in the top three concerns. It should have done because taking too much from your accumulated monies, too soon, might mean you run out of money later on in retirement.
Whether you have 5 or 20 years until retirement, it makes real sense to plan now and start to find out what your financial future could look like.