With an estimated 16,000 centenarians in the UK today, and an expected 110,000 by 2035, having a really long life is not a pipedream.
A woman aged 60 now has a 6.2 per cent chance of reaching 100, so it's no surprise that pension experts suggest you structure your finances for retirement as if you will live that long. But that's not easy. Firstly, your spending needs are likely to change dramatically as you age. And if you save too much and spend too little, you're left with an excess that will be taken by the taxman when you die. Or if you save too little and spend too much, you could be left poorer in your later years or run out of funds altogether. So how do you calculate your 'enough' number? That's the amount you need for your ideal lifestyle which won't run out, even if you live to be 100. Top wealth planners reveal here how you can calculate yours.
1. What lifestyle do you want?
Do you want to see the world and spend money on globe-trotting holidays? Or would a more understated life tending the garden and going on UK breaks suit you?
Matthew Sellens, managing director and financial planner at Crown Wealth Consultants, says there are three different levels of financial freedom in retirement. 'The first is that your basic needs are met,' he says. 'The second is your base needs are covered and you perhaps go on holiday once a year in the UK or abroad. 'But some of my clients see financial freedom as not having to look at their bank account. They carry on doing what they used to do at the end of their career. That's true financial freedom.' Once you have worked out what type of lifestyle you want, you can get into the detail. After all, the cost of holidays is only one component – there are plenty of everyday bills you will need to factor in. Make a list of all your possible outgoings in retirement, and estimating a cost for each based on your current spending. An online retirement budgeting tool can help ensure you don't forget anything, such as haircuts, dentist visits and car breakdown cover. You may want to do this with your spouse, as you will have joint expenditures and income, and may need to align your lifestyles.
Although it's not an easy conversation, it can also be useful to talk through how each of you would manage financially if the other died first. Mr Sellens says the most common mistake that would-be retirees make at this stage is underestimating how much they are going to spend – not on big-ticket items such as an expensive holiday, but on the extra £15 or £20 you may spend every day on items picked up here and there. 'In retirement there's less structure so a couple may pop out to the garden centre for the day and spend £150,' he says. Working out your likely expenditure and planning your retirement spending is an intricate process because there are so many variables. A professional can help you through the process and make sure nothing is overlooked.
This article was first published on MailOnline. Read the original version here.
A woman aged 60 now has a 6.2 per cent chance of reaching 100, so it's no surprise that pension experts suggest you structure your finances for retirement as if you will live that long. But that's not easy. Firstly, your spending needs are likely to change dramatically as you age. And if you save too much and spend too little, you're left with an excess that will be taken by the taxman when you die. Or if you save too little and spend too much, you could be left poorer in your later years or run out of funds altogether. So how do you calculate your 'enough' number? That's the amount you need for your ideal lifestyle which won't run out, even if you live to be 100. Top wealth planners reveal here how you can calculate yours.
1. What lifestyle do you want?
Do you want to see the world and spend money on globe-trotting holidays? Or would a more understated life tending the garden and going on UK breaks suit you?
Matthew Sellens, managing director and financial planner at Crown Wealth Consultants, says there are three different levels of financial freedom in retirement. 'The first is that your basic needs are met,' he says. 'The second is your base needs are covered and you perhaps go on holiday once a year in the UK or abroad. 'But some of my clients see financial freedom as not having to look at their bank account. They carry on doing what they used to do at the end of their career. That's true financial freedom.' Once you have worked out what type of lifestyle you want, you can get into the detail. After all, the cost of holidays is only one component – there are plenty of everyday bills you will need to factor in. Make a list of all your possible outgoings in retirement, and estimating a cost for each based on your current spending. An online retirement budgeting tool can help ensure you don't forget anything, such as haircuts, dentist visits and car breakdown cover. You may want to do this with your spouse, as you will have joint expenditures and income, and may need to align your lifestyles.
Although it's not an easy conversation, it can also be useful to talk through how each of you would manage financially if the other died first. Mr Sellens says the most common mistake that would-be retirees make at this stage is underestimating how much they are going to spend – not on big-ticket items such as an expensive holiday, but on the extra £15 or £20 you may spend every day on items picked up here and there. 'In retirement there's less structure so a couple may pop out to the garden centre for the day and spend £150,' he says. Working out your likely expenditure and planning your retirement spending is an intricate process because there are so many variables. A professional can help you through the process and make sure nothing is overlooked.
This article was first published on MailOnline. Read the original version here.
