Neil Rossiter, Certified Financial Planner at Blackdown Financial, on the importance of planning

Each of us has a number, a number that is very important. This is the amount of money we will need to achieve and maintain our desired lifestyle without fear of running out of money or dying with too much. Is it £100,000, £500,000, £1,000,000 or £5,000,000?

This number will be personal to each of us as we all have different lifestyles.

One person may want to spend their time travelling the world, someone else may be equally content taking walking holidays in the UK.

Factors which contribute to the number could be savings, investments, business sale, personal pensions, state pension, final salary pensions, property downsize and inheritances.

The money we earn whilst working is, for many people likely to be the largest contributor to the number. In my experience this is often underappreciated. I have seen people base their planning on high investment returns which cannot be guaranteed when saving more which is more controllable is ignored When a plane takes off it has a flight plan based on expected events. The pilots/auto pilots then adjust to real life events to land the plan at its destination.

To calculate our number we need a destination (cost of lifestyle) then a flight plan (sensible assumptions) and then course correct/adjust to real life changes.

What is important is not what the cost of soap will be in decade’s time but making sensible long term assumptions which lead to a "best guess" today that is adjusted to real life events.

One of the most important factors in calculating your number is life expectancy. At Blackdown Financial we routinely plan to age 100 and this often causes raised eyebrows, yet a study by the Office of National Statistic in 2012 concluded that the number of centurions will rise from 14,500 in 2012 to 110,000 in 2035 (Source: What are the Chances of Surviving to Age 100? 26th March 2012).

I am not advocating we distil our lives into a spreadsheet but knowing our number helps us to balance the needs of our current and future selfs. Overspending today might deprive our future selfs of achieving financial independence. Equally under -spending today may cause us to not enjoy life to its fullest.

Patrick Mcgoohan said in The Prisoner “I am not a number, I am free man”, I believe if we know our number we can become free people.

Neil Rossiter is a Chartered and Certified Financial Planner at Blackdown Financial and can be contacted on or 01823-321616.