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Trusts and Estate Planning

How can you plan to retire one day if you don’t know how much income you’ll need? You need to write a retirement budget.

It’s actually pretty straightforward, but, in my view absolutely essential, unless you’re another Donald Trump with a few billion US$ to play with.

Here’s how you get started. Ignoring inflation, picture yourself ready to retire. You have no debts and the kids are off your hands and supporting themselves. So all you need is enough after tax income to support your lifestyle and replace things like computers, motor cars and washing machines as and when they become unusable or uneconomic.

Now download the Typical Retirement Budget. Make a master copy, then don’t forget to click Enable Editing at the top.

Start with the estimated annual provision for Capital Expenditure, then annual events and irregular payments and finally normal monthly expenditure. They all reduce to a monthly amount and add up to your total average monthly requirements.


The reason that we ignore inflation is that the investments that are going to produce the retirement income must be such that the income they produce grows at least as fast as inflation (such as rental property or dividends from listed shares). However, you need to re-visit the budget every few years as your needs may change and you must also update it to the then current values so that you can guage your progress by comparing actual investment income after tax achieved so far with your budget requirements.



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