As Independent Financial Advisers, some of the most frequently asked questions we are asked include:
“When can I afford to retire?”
“Am I saving enough?”
“When will my money run out..?”
Without assistance, these are tricky questions for clients to answer, as the answer is influenced by their individual circumstances including lifestyle choices, current financial position and potential life plans. However, these can all be affected by external events too including the performance of investment markets and inflation and the cost of living.
When meeting with clients I use a tool known as cashflow modelling to help them understand their future finances better.
What is cashflow modelling?
Cashflow modelling is used by financial advisers to demonstrate how long your money is likely to last once you retire. They will discuss your current financial situation including asking questions about how much you currently save and invest, what you spend your money on and when you hope to retire, as well as what you hope to do and your lifestyle during your retirement.
That data, combined with expected inflation levels and investment performance as well as statistics on life expectancy is used to provide you with a cashflow illustration that maps out on a year-by-year basis your savings and investments.
Cashflow modelling can help you understand whether your lifestyle goals are achievable and whether you may potentially need to adjust your plans or current levels of saving and investment to achieve them.
Can I change my plans?
Yes! Cashflow modelling is especially useful when it comes to exploring the impact of any potential changes to your plans. A financial adviser can help you to consider your future by exploring how different scenarios might affect your financial position.
These could include:
- Moving your retirement date – potentially taking early retirement
- Planning some global travels during retirement
- Investing more of your money in the stock market
- Gifting money to children and grandchildren
The cashflow model then allows your financial adviser to tailor their advice, giving you security and peace of mind that your are working towards your financial goal.
If your circumstances change, your financial adviser can work with you to remodel and adjust your financial plan accordingly.
If you think that you would benefit from reviewing your financial goals, please contact Greg Holden on 01329 282882 or via our Facebook or Contact Us pages.