How much money you need to fund a comfortable retirement depends on how long you are likely to live and your lifestyle.
Financial planning and saving is all about managing changing circumstances and the goals set 20 years ago probably no longer matter as much as the aftermath of events that have affected your life more recently.
The big factors are marriage, divorce, child birth and illness.
Surveys and financial advice are all based on averages – average longevity, average health and average spending.
Unfortunately, life is not an average.
Fail-safe advice
Someone can have low spending but may not live a long life due to illness or injury.
Others can live until they are 100 years old but run out of money on the way because they are big spenders or have to budget for expensive long term care.
This all boils down to cutting your coat according to your cloth.
Retirement savers have to think about the possibilities that will impact on their lives, but financial advisers who advocate storing up cash that will last until someone is 100 years old are protecting their own backs by giving fail-safe advice rather than sensible, pragmatic recommendations based on the needs of their clients.
For most people aged 65, men will live until they are 83 and women until they are 85.
You only live once
An American study looked at why so many workers fail to save for their retirement, and one reason was the enormity of the pile of money they would have to set aside to live 35 years after they had stopped working.
Others included working for longer than required because of money concerns and failing to enjoy retirement for fear of running out of cash.
The findings disclosed that this would be 40% more than they would need for an average 18 to 20-year retirement.
The usual advice applies – start saving little and early and put aside some of every pay rise to increase the cash pot on retirement.
But don’t forget you only have one chance at this life and you have to spend more than a little along the way to enjoy it.
