The 64 million dollar question

It is the question behind almost every first meeting we have and it is a genuinely hard one, because the single biggest variable is unknowable.

The simple answer to how much

As much as you can.

Unsatisfying, but true. Nobody has ever come back to us at seventy-five wishing they had saved less.

The longer answer and what we need to know

To give you any real idea of how much you might need, we need to understand a number of things:

• Life expectancy for somebody in your current health and situation.
• The income you will need or want to live on.
• Your income and expenditure now, so we can work out what you should be aiming for in retirement.
• Inflation. If a loaf of bread costs £1 today, what will it cost in ten, fifteen or twenty years?
• Your State Pension entitlement.
• Any inheritance you might reasonably expect.
• The potential returns on your existing pensions, investments and savings.

There are also a good many softer questions a qualified independent adviser ought to ask. Part of our job is to push you on what you will actually spend. Will you buy a new car? Travel more? Help the children with a deposit?

A starting rule of thumb

We will generally tell you to aim for an income of around two-thirds of your current income in retirement. It is a blunt instrument and every individual case moves away from it, but it is a far better starting point than a number plucked from a newspaper headline.

And to get there, you do need to save.

Turning it into a plan

This is precisely what cashflow modelling is for. Rather than guessing, we map what you have, what you are putting in and what you will need, then test it against good years and bad ones. Most people find they are closer than they feared. Some find they need to act. Either way, you find out while there is still time to do something about it.

Our firm motto is to help our clients live life by planning well. This is what that means in practice.