The last 15 months have triggered changes to objectives for many of our  clients, whether that be; (i) buying a second property, (ii) renovating an existing property, (iii) accelerating retirement or (iv) bringing forward travel plans which had been expected much later down the line. There is a noticeable shift among some clients to plan to ‘live for the now’ as we hopefully exit lockdown.

Indeed, one of my clients recently told me that holidays historically formed 35% of their annual expenditure, and they want to understand if this is possible to maintain (or even increase) both now and into retirement. This is a key financial objective for them.

We have all largely missed out on getting away since March 2020, but with travel restrictions starting to lift again (subject to traffic lights and variants) you might be asking yourself whether you can afford a ‘blow-out’ holiday. And, actually, while we can probably use cash saved up over the last year to fund our 2021 holiday – how much can be spent on holidays every year, both while working and into retirement?

Our 2020 Financial Wellbeing research uncovered the fact that ‘a deterioration in wellbeing in other walks of life e.g. mental, physical’ is a key worry for many high net worth individuals when they are considering their own financial wellbeing. And for many people, holidays will form a key role in supporting their overall wellbeing.

Meeting with an adviser who is able to run a long-term cash flow forecast, factoring in all current income, expenditure, assets and liabilities, and how these might project going forward, can help clients to visualise how their future might be funded; including an allowed expenditure for holidays, and increase clients’ peace of mind which leads to improved financial wellbeing.

So, how much can I afford to spend on holidays both now and into retirement?



The above graph shows how a married couple (currently aged 48 and 45) may fund their retirement (from age 60 to 100) using a typical portfolio built up as a client of Saunderson House. The black line (at the top) illustrates income need (factoring in tax and inflation and their desired level of expenditure, including a provision for holidays) and the coloured bars illustrate how this need is met each year. In the scenario above, the couple have property rental income (shown in pink), a defined benefit pension from age 60 onwards (shown in green) and state pensions from age 68 onwards (shown in dark blue). The rest of their income in retirement is drawn first from non-pension savings and investments (such as ISAs and Investment Accounts, shown in light blue) that would be subject to Inheritance Tax (on second death), leaving pensions (shown in silver and then orange once inherited by the surviving spouse) untouched until all other accounts are depleted, so that this can be passed on to their children free of Inheritance Tax.

The absence of any red bars indicates the couple projects to be able to meet their income requirement in full (including for annual holidays), based on the strategy put in place with their Saunderson House adviser. Indeed, at age 100, the cash flow projects that the pensions will be worth c£730,000 (in today’s terms), as shown below:


The forecast has been produced using current software provided by cash flow solution, Voyant1


Cash flow forecasting can be a very useful tool in helping to answer many of those questions that play on our clients’ minds and is something that Saunderson House continues to integrate into our service, to help clients achieve that sense of financial wellbeing. If you do not have one already, take some time to talk to one of our advisers about how we can help you put in place a financial strategy to achieve your longer-term objectives, whether that be for holidays or anything else on your mind that you want to achieve.

If you have any questions please contact your usual Saunderson House adviser.  Don’t have one? Contact us on the general contact page and we will be in touch shortly.


1The forecasts make many assumptions, which are based on estimates of future economic indicators (such as inflation and growth rates) and your own personal circumstances, all of which are subject to risks and uncertainties that could cause actual results to differ materially from the assumptions.

2It is also important to note that the method in which the cash flow runs down your assets may change over time subject to your future requirements, overall position and legislation. However, the cash flow forecast helps to provide a simplified strategy and a broad indication of how your overall assets may deplete over time.

About The Author

Max Folland
Max joined Saunderson House in September 2008. An experienced Chartered Financial Planner, Max is passionate about helping clients achieve ...
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