Know your future with cashflow modelling

Pensions and retirement
Views & insights

Financial advisers use cashflow modelling to show how long your money is likely to last in retirement. Here’s how it works.


19 June 2024 | 3 minute read

‘Am I saving enough money?’ ‘When can I afford to retire?’ ‘How long will my pension last in retirement?’ Most of us have asked ourselves at least one of these questions.

They’re difficult questions to answer because they not only depend on your individual circumstances – your current lifestyle, your existing financial position, what you plan to do in life – but also on events that may be outside your control, such as inflation and investment performance.

It might seem like you need a crystal ball to understand your future finances, but this isn’t the case. By using cashflow modelling, a financial adviser can help provide clarity over your future and help you answer these all-important questions.


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What is cashflow modelling?

Cashflow modelling is used by financial advisers to demonstrate how long your money could last in retirement. Your adviser will provide you with a cashflow illustration that maps out your savings and investments, year by year.

The cashflow illustration will be completely personal to you. Your adviser will base it on things like your current finances, how much you’re saving and investing, your spending patterns, your target retirement date and your aspirations for the future. They’ll also take into account projected inflation and investment performance, as well as your life expectancy.

How could cashflow modelling help me?

Cashflow modelling provides a really powerful insight into the health of your future finances. It can help you understand whether your goals are achievable and whether you might need to make any changes to your plans or saving and investing habits.

Cashflow modelling can help to answer questions such as:

  • When can I afford to retire?
  • How long will my savings last?
  • Can I afford to leave a financial legacy for my loved ones?
  • What would happen to my finances if I needed long-term care?

What if my plans change?

Cashflow modelling is especially useful when it comes to exploring the impact of any potential changes to your plans. Your adviser can help you to ‘rehearse’ your future by exploring how different scenarios might affect your financial position.

Some of the scenarios may include:

  • Delaying or bringing forward your target retirement date
  • Taking more or fewer holidays in retirement
  • Investing a greater proportion of your money in the stock market
  • Accessing your pension via income drawdown instead of buying an annuity
  • Gifting money to children and grandchildren.

What happens next?

Once you have clarity over your finances and how you’d like your future to evolve, your financial adviser can create a personalised financial roadmap that sets out the steps you need to take to help achieve your ambitions. Those steps could include taking on more investment risk, maximising your tax reliefs and allowances each year, or making a series of tax-efficient gifts; all of these are areas your adviser will be able to help you with.

Cashflow modelling isn’t a once-and-done exercise. Your circumstances could change in the future and it’s important that these changes are reflected in your financial plan. That way, you can feel sure your aspirations are still achievable.

Life may feel uncertain, but your finances don’t have to be. To gain clarity over your future finances, book a consultation with one of our financial advisers today.


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The value of investments, and any income from them, can fall and you may get back less than you invested. This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Forecasts are not a reliable indicator of future performance.

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