IN THE BACK
QUESTION 1
What kind of retirement do you want ?
This is an important question , and one that many people don ’ t even ask . Are you single or married ? Do you have children and grandchildren ? Are you going to stay in the same house or downsize ? Are you thinking of retiring overseas ? Are you going to carry on working past retirement age ? Do you have mortgages or other debts that need settling ? It is worth grabbing a piece of paper and writing down how you imagine your retirement will pan out . This could prove to be a valuable exercise , as how you spend your days in retirement is likely to be different to how you spend them while you are working . It ’ s also likely to be different to how previous generations spent their retirement , so don ’ t look at your parents or grandparents for clues . They had two “ advantages ” over us : they were likely to have had more generous defined benefit or final salary pensions , while shorter life expectancies meant any savings didn ’ t have to stretch as far . This creates the dilemma of how to make a less generous pension last for longer . But before we deal with that problem , we need to know what kind of lifestyle we want and attach a “ cash-burn rate ” to it . Here ’ s my plan , as an example : I don ’ t need to live in the large house I own now , so I plan to sell it soon , pay off the remainder of the mortgage and buy two smaller places : one in the UK and ( if we ’ re still allowed ) one in Europe . We ’ ll live equally in both places postretirement , before we eventually decide on which one to settle down in and which one to sell . This will involve double property costs and lots of travel , including a car or two . Then I need to overlay these costs with living expenses , such as bills , food , clothes
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