Lifetime financial planning done correctly has to include a fluid financial forecast created using sophisticated planning software.
We take a snapshot of your financial situation and project this forward year by year. The process is only as comprehensive as the information we put into it. The more information we put in, the better the output.
The software works by running the numbers on anything needing time, money or planning to achieve. The more detailed we can be, the better.
To start, we enter your financial data, including your income, expenditure, assets, and liabilities. These items will reflect your current position but will also include any changes that might happen in the future, such as starting to get the State Pension.
We use certain assumptions about the future. The three most significant ones are:
- Inflation (applied to all expenditure items)
- Investment returns
- Cash saving returns
Once all the data and assumptions are in, we can start seeing what is possible. We can then assess whether you are on track to achieve what you want to achieve. If you are not, we can look at you could do to improve your chances. With every financial corner you turn, it is essential to ‘run through the numbers’. This will help you make sound financial decisions.
Questions forecasting could help with include:
- Am I saving enough for my retirement?
- When will I have enough money to finish working?
- Can I work part-time and then retire in five years?
- Can I give my daughter some money to buy a house?
- What returns do I need to never run out of money?
- If we both died, how much death tax would our loved ones owe, and what can we do about it?
- How much more do we need to save?
- How much more can I spend?
- If a catastrophe happened to me tomorrow, how will this affect my plan and my family?
- Do I need more life insurance?
- What do I need to sell my business for, so I can become financially independent?
A financial forecast uses educated guesses as to how certain things will pan out. Reality will be different, and we need to update your projections regularly. This will always look to give you peace of mind.
