Do you have an IFA at all?
DH and I retired 5 years go, when we were 61 and 57. The first couple of years we lived off our ISA’s, but then decided to start drawing our personal pensions. We found the mechanics of doing that quite complicated, so approached an IFA.
I am really glad we did. Yes, it costs us money in fees etc, but the analysis and information she provides is extremely helpful.
At our annual review, she asks us how much income we want after tax, then runs an analysis showing what effect taking that would have on our assets going forward. It factors in things like “We want to spend £££ on a new car in 2 years” and “we will both be in full time care from the age of 95 until we die at 100”.
Then it comes out with a couple of figures. The first is how much we could afford to spend so that we don’t run out of cash before we die. As long as that number is above the income we’ve said we want, all is well. The second is, how much we could afford to lose (or spend) this year and still meet our expenditure goals for the rest of our lives.
Obviously the numbers are based on assumptions of future inflation, investment returns, the tax situation etc. But they are updated annually, so if your margin is being eroded, you can see it coming and adjust accordingly.
Having that information has reassured us, and in fact encouraged us to take more income from our pensions and enjoy ourselves more. The other side of the coin is that if it told us we would run out at 78, we would know we needed to adjust our plans.
We only did this after we had retired, but if you did it now, you would have a very clear view as to how far your current asset base would take you.