By David Porter, Financial Planning Consultant at Armstrong Watson

THE prospect of retirement can conjure a spectrum of emotions; from fear and dread, to excitement and longing.

For some, the thought of finally leaving work for good and focusing on the aspects of their life they really enjoy is fulfilment of a dream, but for others retirement leaves them with concerns over how they will fill their time, or with worry about how they will manage financially when their income reduces.

So why there is such a disparity between these two views on retirement?

In many ways the answer comes down to the effectiveness of the planning and preparation undertaken before retirement. It is not necessarily true that wealthy retirees enjoy the happiest and most fulfilling retirements, it is probably more the case that the people who can afford to live out their final years in comfort are financially prepared. This is not the same as being wealthy.

What factors need to be considered when constructing a retirement plan?

In research conducted by MGM Advantage last year for adults aged over 55, 69% said running out of money in retirement is a major cause for concern. One in two said budgeting for the whole of retirement is a reason to be concerned, as is assessing how long they would live for. So longevity, which is a positive factor and enables longer, healthier retirements for many, is also at the core of the most significant concerns.

Is there a point in time which is reached where consideration is given to gifting funds to the next generation? Should you consider gifting funds when your own retirement is less than secure? Or, do you feel able to gift funds when you have sufficient capital and income beyond your lifetime needs?

It’s important to have an approach that sets out the different scenarios to highlight what could happen to your money and where that would leave you once you are clear on your objectives.

Understanding the impact that the decisions you make today will have on your future finances is an important factor. We provide a personalised lifetime cashflow forecast to our clients who find themselves in this scenario which provides a visual display of how their future finances will look, both from a cashflow point of view - will I have enough money to pay my outgoings? - and from an asset point of view - how much am I worth and what capital do I have access to?

All assets and income sources are factored in, as are hypothetical situations – what if future returns are ‘x’ instead of ‘y’; what if inflation is ‘a’ instead of ‘b’; what if I live to 95 instead of 85? This means it becomes a unique, personalised lifetime forecast that best reflects the future that they can expect.

When reviewed regularly as part of our ongoing review service, this approach can help to deliver peace of mind and clarity about how the decisions made today could impact upon the future.

For impartial, independent advice, please contact me to discuss your retirement needs and to review your existing arrangements on 01756 620000 or email david.porter@armstrongwatson.co.uk.