Retirement is a major milestone, but for many, it can feel daunting. Questions like “Do I have enough saved?” or “How do I ensure my money lasts?” often keep us up at night. In this video titled ‘I’m 60 with £1 million. How much can I spend in retirement?’, we explore how Steve and Sarah, a 60-year-old couple, navigated these challenges to plan a sustainable retirement with a £1 million portfolio.

Overview of Steve and Sarah’s Financial Picture

Steve and Sarah had worked hard to build their assets, which included:

• Defined contribution pensions of £350,000 and £370,000
• Stocks & Shares ISA worth £125,000 each
• Cash savings worth £50,000

Therefore, excluding their home which was valued at £650,000 (mortgage free) they had in the region of £1 million in liquid assets to fund their retirement. So, they are asking themselves ‘I’m 60 with £1 million. How much can I spend in retirement?’.

Retirement Goals

Steve and Sarah aimed to enjoy a comfortable retirement with a lifestyle costing £5,000 per month.

Initial cash flow projections showed their portfolio risked depletion by their early 80s, giving them a retirement score of just 65%. Therefore, they needed to make some adjustments to improve their retirement and reduce the risk of running out of funds.

Adjustments That Improved Their Plan

In order to improve their retirement outlook, we implemented the below strategies:

Delaying Retirement

By postponing retirement until age 62, Steve and Sarah could continue contributing to their pensions and ISAs while delaying withdrawals. This simple adjustment increased their retirement score to 78%.

Part Time Work

Instead of fully retiring, they explored part-time roles that matched their interests, like volunteering with an animal charity. They agreed to do this work from age 62 to 65 – part time work for three years. This approach provided income and reduced the need to withdrawal heavily from their portfolio. Their retirement score increased to 83%.

Adusting Retirement Expenditure

Recognising that spending tends to decline as people age, they adjusted their plans. By being more mindful of their future expenses, they raised their score to 105%, ensuring their portfolio could comfortably support them.

Improved Retirement Portfolio

A review of their portfolio showed it was too conservatively invested for their long-term goals. Increasing their equity allocation and diversification boosted their expected returns, improving their retirement score to 128%.

Staying Tax Efficient During Retirement

By carefully planning withdrawals from their pensions and ISAs, they minimised unnecessary tax liabilities. This raised their score to 131%.

Conclusion

While saving and investing are vital, this video focuses on how small adjustments can significantly enhance financial security and help you maintain your desired lifestyle in retirement.

If you have any questions about your plans for retirement, then get in touch for a free, no obligation chat: