Know your future with cashflow modelling

Do I have enough money saved? When will I be able to retire? How long will my pension last? The majority of us have considered at least one of these questions, but the answers become even more important the closer to retirement we get.

How to answer these questions is often quite difficult as it depends not only on your unique situation (your way of life now, your financial situation, and your plans for the future) but also on factors that may be out of your control, such as inflation and investment performance.

Whilst we don’t have a crystal ball, as your financial adviser we can help you understand your future and find the answers to these crucial questions by using Cashflow Modelling.

What is cashflow modelling?

Cash flow modelling is an interactive tool we use to help illustrate and bring your retirement plan to life. Completely unique to you, it takes into account your current situation, your spending habits, and your desired retirement age. All of this information alongside assumptions on investment performance, the rate of inflation and life expectancy allow us to forecast your future financial situation in a nice, and easy to understand graph. It can help us demonstrate if you are on track to achieve your retirement plans, or if you’re not, show you ways which might help mitigate against any potential issues. 

How Cashflow modelling works 

It’s really simple, but does require a little bit of homework from you! Firstly you need to tell us a bit about yourself, we ask you to do this by completing our data capture form. To get the most out of your cash flow model we need as much information from you as possible – we promise it’s not because we are being nosey! 

Using our interactive software, your information is used to create your financial plan which together with your adviser can be amended as required, for example if you wanted to look at the impact of retiring earlier or later than planned, or if you were to increase or decrease your pension contributions. At the end of the session your adviser will provide you with a copy of your plan for you to take away with you. 

The good news is that once set up, you only need to review your information (we recommend every couple of years) to ensure it remains up to date, if anything changes, don’t worry we can amend your plan making sure that you always remain on track. 

Cash Flow modelling in practise

One of our clients came to us after a period of sickness which unfortunately required several hospital admissions. He wanted to review his existing pension and investment arrangements to see if it was possible for him to reduce his hours at work down to 2/3 days a week. With the use of our cash flow modelling tool we were able to show the client what this would look like and if it was a viable option.

Like most people who want to retire early, our clients biggest issue was bridging the gap between now and their state pension age. Using his pension alongside his other investments we were able to show him that with some careful planning he could afford to reduce his hours at work and still maintain his lifestyle.

What next?

Our advisers at Fathom can use the cash flow modelling tool to help build you a personalised financial roadmap that sets out the steps you need to take to achieve your ambitions.

Life may feel uncertain, but your finances don’t have to be. To gain clarity over your future finances, book a free consultation with one of our financial advisers today https://fathomfinancial.co.uk/contact/

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