By THOMAS DICKSON, Managing Director at Essential Money
The average life expectancy is just over 80 so if you’re in your mid to late 50s the chances are you may only have 25 summers left.
Have you planned out where you want to go and what you want to do?
The reason I ask is that we do financial planning for dentists and we do it by crunching the numbers to give them a realistic idea of their options.
When we meet new clients we always ask them a question: What do you want to do with the rest of your life? Actually we ask it three or four times. Sometimes you’ve really got to push to get under their skin.
We’re looking for what matters in their life, their priorities, and it can take some time for us to work out what they are.
We usually ask how old their kids are and then say: “So how would you like to spend your last 25 summers with them?”
They might think, “If my youngest will be 30 when I die, I want to spend more time with them in the next 25 years than I have been doing.” Maybe that means they’ll decide to work less.
We then gather all the numbers: their ISAs, NHS and state pension, income, estimate costs in the future such as repairs on the house, the equity released if they’re planning to downsize – absolutely everything.
We crunch it all and work out if they can stop saving and working now and still do all the things what they want to do. It might be they’ll have to work and save for a few more years to fund their £10k a year holidays, but if they do this they can continue with the holidays for 20 years. Which might be the perfect outcome for them. Everyone’s different.
Part of this process is about gently delivering a wake-up call and to do this we use a powerful questioning technique. Let’s say you’re 60 and have arranged a financial planning meeting. I’d ask you to imagine you’re sitting here now aged 85 and looking back on the last 25 years and seeing yourself as you are now. What would you need to have done to be happy with your life?
The impact of combining this big picture vantage with forensic forecasting is often dramatic. We met a dentist a few years ago who just didn’t know how much money he had and was incredibly stressed owning and managing a very busy practice. He was on medication for depression and in a sense he was in denial of the personal misery his life strategy (or lack of it) had produced.
Very quickly we proved he had enough money, and within a year he’d sold up. We met him a year later after he’d just been on a golf trip and he was off his medication. He’d got his life back.
Some aspects of our work are a bit like counselling in that we’re not telling people what to do, we’re just helping them look at their options and think clearly using the best information. The two questions are always what can you do, and then what do you want to do?
You’ve got to have a plan for your life otherwise you’ll end up living someone else’s plan.
One of my clients decided to sell his dental practice and take his pension in his mid-50s, trading in potential wealth for time with his family and grandkids. He told me he took the decision after a patient of his said to him one day: “Why have you not retired? Make sure you leave enough time to do something else. I left it too late.”
A lot of people miss their chance of happiness simply because they didn’t work out what they wanted to do with their life.
A client of mine was 75 when I met him and he said all he wanted to do in his retirement was to play golf. “I could have sold 15 years ago,” he said, “but now my knee’s knackered. It’s too late.”
Don’t leave it too late. How many summers have you got left?