“The best laid schemes o’ mice an’ men, gang aft agley”. So said Robert Burns in his poem ‘To a Mouse’, lyrically summing up the idea that no matter how well we prepare, there are always factors beyond our control that can cause our ‘best laid’ plans to fall to pieces.
While the same can be said for financial planning, there are a large number of factors that are under our control, one of which is preparing for the possibility that our plan ‘A’ might not work out. Making a plan ‘B’ is not admitting defeat, but sensibly working on the assumption that nothing about preparing for the future is guaranteed.
When it comes to retirement planning, too many people give themselves a single plan without having an alternative they can turn to. This is most common amongst those who have made plans themselves without consulting a financial planner. One of the most frequent mistakes made is planning for too short a retirement. It’s always better to be optimistic about how long you might live. That way, if you overestimate, your money won’t run out and can become part of your legacy.
A growing number of retirees are planning to continue working in some capacity after they retire, either extending their previous career through taking on a consultancy role or taking on a part time job. Financial planners, however, are increasingly recommending that any income from working in retirement should be factored in as additional income rather than something you rely on to ensure you have enough money each month. That way you have the freedom to reduce your hours or stop working altogether whenever you want.
Plan ‘B’ is not always about the worst case scenario, however. It could be that your main plan assumes a certain amount of savings in your pension, whilst your backup plan is more optimistic but less likely. If you find that you do reach retirement age with more money available than you expected, plan ‘B’ could be your way of ensuring you make the most of life after work. If you planned to move abroad, look at more expensive destinations that might offer you even greater benefits than your initial choice.
If you’re nearing retirement and would like help putting together your plans, you can call us on 01789 263888 or email firstname.lastname@example.org.
A pension is a long-term investment not normally accessible until 55. The value of your investment (and any income from it) can go down as well as up and you may not get back the full amount you invested. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in future.