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16 Feb 21
In the third instalment of our series looking at pensions and retirement planning, our Chartered Financial Planner Mark Russel explains the importance of being a conscious saver and the impact it could have on your retirement plans.
As Mark Twain once said; ‘in 20 years’ time you will regret the things in life you’ve not done and not the things you’ve done’
Sadly we do not come with an expiry date, if we did I could formulate the perfect financial plan! You run two risks, living too long or dying too early. My job as a financial planner is to help my clients twofold; ensure they have enough for retirement and are able to protect their legacy with good estate planning.
In order to achieve financial independence you need to be ‘conscious savers’ whether that be paying down debt early, saving into the ‘rainy day fund’ or paying more into pension that the minimums required.
Having attained financial independence the ‘conscious saver’ needs to become the ‘conscious spender’. This should not be misinterpreted as being a reckless spender but having peace of mind that you can afford to do the things you have planned to do without ever worrying about running out of money.
In my opinion making this transition from conscious saver to conscious spender is easier to say than it is to do. Imagine you have sailed your ship in a particular direction all your life and you now need to do a 180 degree turn and sail off in a different direction, this takes time to achieve. Put it another way, underspending in retirement is like sewing a seed and then not reaping the harvest.
Know your costs
Budgeting equals awareness, it is to become aware of what and where you spend your money so that you have enough for the things that matter most. Once you have established what you spend your money on each month, remember that in the main these costs are only ever going to increase
You need to ensure that you have ‘enough fuel in your tank’ to see you through that potential three decade plus retirement journey. An Independent Financial Adviser will work with you to create a retirement plan that will help you ‘fill up’ that tank.