You may have a financial plan, but do you have a financial plan B?

Date Published: 22/11/2019 15:56

It’s a fact that no matter how well we prepare, there are always factors beyond our control that can mean our ‘best laid’ plans unravel.

Whilst the same can be said for financial planning, there are some factors that are under our control, such as preparing for the possibility that plan ‘A’ might not happen. You shouldn’t think of making a plan ‘B’ as admitting defeat; it’s about preparing for the fact that nothing about the future is guaranteed.

When planning for retirement, 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 an independent adviser. One of the most frequent mistakes made is planning for too short a retirement. It’s always better to be optimistic about how long your pension will need to last. That way, if you overestimate, your money won’t run out and it can become part of your legacy.

An increasing number of retirees are planning to continue working after they retire, either by taking on a part time job or extending their previous career through a consultancy role. Financial planners, however, are increasingly recommending that any income from working in retirement should be factored in as additional retirement income rather than something you rely on to ensure you have enough money each month. Using this method, you have the freedom to reduce your hours or stop working altogether whenever you want.

But Plan ‘B’ is not always about the worst-case scenario. Your main plan could assume 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, please get in touch with us directly for further guidance.

No individual investment advice is given, nor intended to be given in this article and liability will be accepted in respect of any action you may take as a result of reading this article. If you are unsure you are urged to take independent investment advice.

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