A good old chinwag with clients in a social situation last week led to a discussion about our respective financial journeys; the good and bad decisions, and about how we wished we had always been dialling into a plan to check that we were on track.
On track for what though?
We were now onto our second glass of wine, the conversation flowed and Mike began to describe his financial journey. He struck such a chord with me, that I had to write down the essence of what he said:
“I reckon there have been a few stages in my financial journey…
Irresponsibility: A great time for sure. Not many cares. We had freedom of thought and abundant opportunities. We were going to change the world, especially when we were students!
A dose of reality: Life wasn’t that easy having crawled from under the wings of Mum and Dad. Blimey, renting was expensive and so was food. Work was far too serious. We only just had enough money for drinking!
Pride and Prejudice: We wanted to make something of ourselves. We had pride in what we did but it took some time to understand the ‘dog eat dog’ attitude of the workplace. Pensions, what were they for?
Firmly established: We had a career, responsibilities and family. No time and no money!
Retirement fear: Crickey, we were just entering our 50s! Better start looking at all the plans we had accumulated and make sense of them all. We still had no time and kept putting everything off. We were still young you see! Difference was, we now had money and assets.
Biting the bullet: This was the time to be grown up and really seek help. Who should we talk to though? Who do you trust? Are they going to sell us something? Then you came along.
Eureka: We couldn’t believe what was possible. We thought we would have to work at least until 65. We never dreamt that retiring at 58 was possible. We’d been worrying that we hadn’t enough to retire at age 65, never mind 58! Then we began to doubt what you said. Has he really got this right? Sounds too good to be true.
Yes, it works: Now we are living it. What we couldn’t get our heads around at first was the drop in income. We had been working off the gross income however, not what we received in our pockets. When you take away all the income tax payable, National Insurance contributions, pension contributions and benefits in kind, the replacement income required from our pensions seems far less daunting. Supplemented by our savings and investments we now believe we are in a very healthy position.
Ironically, now we have the time to plan, we don’t need to as we only have to check in each year. When we really needed to plan we didn’t have the time or perhaps more importantly we didn’t make the time.”