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I wanted to share a story with you so that you can protect yourself from falling into the same trap...
Having recently met with a lovely couple, it occurred to me that there seems to be a growing trend which I fear could be setting people up for financial failure. What seems to be happening is that the kids have grown-up, the husband is hard at work (or perhaps the wife) and the boss of the house is following their passion be it as a yoga teacher, artist, actor, you get the gist. This will typically produce only a minimum income but the thinking is that with less bills, hey it works.
It’s not long into the conversation that the one who is semi-retired says that their husband / wife also wants to retire sooner rather than later and then they are going to go on lots of holidays and live a great life.
At this stage I start to feel uncomfortable as there is so much excitement and why not, it’s the perfect life! So, why are you feeling uncomfortable you may ask?
Well, in our discussion they have told me how much they think things are going to cost and other than a few shekels the cupboard is bare. So, I ask "how are you going to finance this perfect life?" "Oh, we thought we could use our pension which has got £100k in it, so we need you to tell us how to invest it so we can retire!"
I hate to be the one to spoil the party but let’s just say if your heart's desire is to retire and live all those dreams don’t leave it too late - I am a financial planner not a magician!
Consider that it is from the age of 50 when you can bank more capital for your next phase of life’s journey as you are in peak earnings territory and one partner taking a lower paying role at that crucial point might sound great but will not be financially contributing to the next phase of financial freedom and this puts the long-term picture in jeopardy.
Steven is a Fellow of the Personal Finance Society, whom is passionate about investing and getting the most from your money.
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