Planning means thinking ahead and preparing for the future. If you’re already a fully-fledged retireista then it’s likely that you have a financial plan to support you through the years ahead. But don’t be complacent: all plans should be reviewed and adjusted regularly to keep up with the times, and changes in legislation.
And if you don’t have a plan, we can’t urge you strongly enough to get one – NOW!
There are two simple formulas that are widely used as a rule of thumb to help us work out how much money we need to enjoy our retireista years. Firstly, you can ‘multiply by 25’. If you want to withdraw £40,000 per year from your financial pot you will need the pot to be worth at least £1m (ie 40,000 x 25). Or you can apply the ‘4% rule’ which determines that you should not withdraw more than 4% of your pension pot in any one year (ie, if your pension pot is £1m, then you can withdraw up to £40,000 per year because 1m x 4% = 40,000).
Not everyone agrees with validity of these rules, but they’re a great starting point to illustrate how much money you might need in order to enjoy your retireista years. And if it seems unattainable or unrealistic, call in some professional advice to review your options and look at the alternatives. No matter how financially savvy you might be, an independent and dispassionate view will always provide a clearer perspective.