Visualise and understand your future

Visualise and understand your future is Tip 20 from our ‘ Just one Financial Thing’ tip series. You can find the whole series here https://fhmanning.vps03.dev.inetservices.co.uk/just-one-financial-thing/ This #JustOneFinancialThing is to understand what the future might look like. I appreciate this is not easy as there are many eventualities and variables. We use financial forecasting to try and understand what the future could look like, with a disclaimer that things change and it could be wrong, but it is better than no plan at all. As an example, many people pay into their workplace pensions but do not actually understand what this means when they stop work. Not many of us have the luxury of a final salary pension, where it was much clearer how much you would get as an income if you stayed with the same employer your whole working life. Our retirement is more tied to investment returns and we also change jobs more frequently, so the projections we do get don’t give the full picture. You may decide that a simple spread sheet could be sufficient, with details of your current pensions, monthly contributions and other savings being compounded at a set rate of return to work out how much it could be worth at your anticipated retirement age. This can be compared to the retirement living standards (https://www.retirementlivingstandards.org.uk/) to see if there is shortfall. You may however decide that a more sophisticated analysis is needed ,with full financial forecasting. Whichever route you choose will help guide you future decision making.