Are you concerned that your funds will not see you through your retirement?
There are a number of ways in which you could organize your financial affairs to ensure that your money will last long enough.
If you are a Retireeasy.co.uk user here are some options you may wish to consider if you find out from completing the RetireEasy LifePlan that your liquid funds are going run out too soon.
- If you’re not already retired save more between now and retirement. To do this, go to either: 1. Your appropriate Pension page – ‘Private Pensions’ or ‘SIPP and SSAS’ – and click on ‘Yes’ to “Do you wish to make further contributions to this fund?”, and follow the prompts. OR go to the ‘Contributions’ tab in the ‘Assets and Investments’ section and again, follow the prompts.
- Reduce your Desired Income. You can either simply reduce the headline Desired Income immediately (or at retirement, if not yet retired), inflate it annually by less than your assumed inflation rate (or set the inflation rate for Desired Income at zero), or reduce your Desired Income from set date(s) in the future. All of these options are available via the ‘Desired Income’ tab in the ‘Expenditure’ section of your LifePlan.
- Plan a home downsize. You can do this by selecting the ‘Future Downsizes’ tab in the ‘Home’ section of your LifePlan. This enables you to choose the age at which you plan the downsize, the percentage of your home value that you wish to release, and how much you expect to use to repay any outstanding mortgage. The surplus will be added to your notional investment account which will use your base assumptions on growth and yield to grow these ‘investments’. You can choose further downsizes if you think this might be something you would do more than once.
- Take out a Lifetime Mortgage. The ability to easily model this option (which is becoming ever more mainstream) will be incorporated in our soon-to-be-released LifePlanPlus (which will be available for a modest monthly fee). More details will be revealed closer to the LifePlanPlus release.
- Continue working after retirement. By selecting the ‘Jobs’ tab in the ‘Income’ section of your LifePlan you will find several options, including to continue working – full or part time – or to start working again after retirement. You will be able to select ‘From’ and ‘To’ dates for future jobs and inflate the income over time. You will need to enter your National Insurance contributions manually, but LifePlan will, of course, calculate your tax liability for each year automatically.
- Sell a personal possession. You may have one or more personal possessions, such as a caravan, boat, work of art, or classic car which you feel you could sell in the future in order to supplement your income later in retirement – some of these items you may feel you will, at some time, have no further use for.Go to the ‘Personal Pensions’ tab in the ‘Assets and Investments’ section and, if you have entered a suitable asset, click ‘Yes’ to the question ‘Do you plan to sell this asset one day’, and choose the year in which you might sell it. Remember to allow for some Capital Gains Tax if you think this is necessary.
- Sell a Business. If you have a personal business you can choose a date when you plan to sell it. Go to the ‘Business Investments’ tab in the ‘Assets and Investments’ section and click ‘Yes’ to the question ‘Do you plan to sell this business one day?’, and follow the prompts.
- Sell a Property Investment. If you own, or have a share in, one or more buy-to-let or commercial properties, you can, by clicking on the ‘Property Investments’ tab in the ‘Assets and Investments’ section select the desired property and answer ‘Yes’ to the question ‘Do you plan to sell this property one day?’ You will then be able to choose the age at which you expect to sell this property – again, just follow the prompts.
Whenever, you try out a different option, you can immediately check the effect on your LifePlan outcome by just glancing at the ‘Snapshot’ which appears on every entry page.
We are sure that you will be able to think of other options, not listed above. So, see how you can model these in your RetireEasy LifePlan and, please, do let us know your ideas. We are always looking for ways to enhance our product and could incorporate other options in the future! www.retireeasy.co.uk
All of these options will be much easier to understand in the new ‘Multiple Scenarios’ tool which we are releasing as part of the upcoming LifePlanPlus product. You will be able to create and save some, or all, of the different scenarios you try out and choose the one that you feel is most appropriate as your ‘Default’ LifePlan.
LifePlanPlus will launch in the second quarter of 2016