You Need a Bucket to Make Your List

Do you have a bucket list? Ever since Jack Nicholson and Morgan Freeman’s eponymous film popularised the idea back in 2007, the bucket list has captured our imagination and become a common reference point. However, few of us have really taken time to consider what’s on our own.

The Bucket List tells the story of two men from very different walks of life. They meet in the hospital, both terminally ill and emotionally adrift. Edward, played by Jack Nicholson, is exceptionally rich (he owns the hospital), but deeply lonely. Carter, Morgan Freeman’s character, has a loving family and strong faith, yet feels like a stranger to himself. Together they decide to do all the things they have ever dreamed of doing before they “kick the bucket”.

The storyline is a familiar concept. The Latin phrase ‘carpe diem’ has been urging us to ‘seize the day’ and make the most of our three score years and ten since it was coined by Roman poet Horace in 23 BC. It is meant to encourage an awareness in us that our time here is finite, so we should make the most of it.

Planning for financial independence, or ‘retirement’ if you like, and waiting for retirement are very different mindsets, and the latter should be discouraged. At First Wealth, this is part of our ethos. We believe that everyone should enjoy life to the fullest for themselves and their family. Our planning service helps clients to understand what’s most important to them, and why.

This brings us back to the bucket. When we’re helping people to plan, we ask them to think of a bucket. What’s in the bucket represents the pot of funds needed to see them through their retirement comfortably.

Having a jumble of pension plans, managed portfolios, ISAs, bonds, life insurance and endowment policies can make it difficult to get a full picture of your wealth. During our engagement process, we will help you to identify all your resources, income, investments and liabilities. Our ‘Where are you today?’ questionnaire provides a sensible structure to document what you are earning, where you are investing and, perhaps most importantly, how you are spending and what you expect to spend in future.

The bucket model illustrates three scenarios. If your bucket becomes empty or has too little in it, you haven’t planned sufficiently. Often people assume that they will be spending less money when they retire while in reality, they spend more because they have the time. You may find there are leaks draining away your savings through frivolous spending, funds that are charging excessive rates, or schemes that could be consolidated to improve returns and reduce management charges. Without enough in your bucket there’ll be no working through your bucket list – so no trips to Niagara Falls, no swimming with dolphins, and that the top-of-the-range Porsche will stay resolutely on the dealership forecourt.

What if your bucket is overflowing? You may be thinking that’s the best outcome – you’ve been so efficient at saving and preparing for your retirement that you’ve got more than plenty set aside for your golden years – and actually, you have too much! You may feel reassured by the security this offers, but the question remains, at what expense? An overflowing bucket means you’ve held on to money which you could have used to enrich your life. It could leave the tax man with more than necessary when actually your money should be there to create opportunities, fulfil ambitions and leave a lasting legacy.

Finally, the Goldilocks scenario, if you’ll forgive the mixed metaphors – you’ve got the perfect amount in the bucket. It’s healthily topped up and there’s no danger of it running dry. You’ve gauged it just right so there’s plenty in there to enjoy your comfortable retirement but you’ve also had the freedom to have lived and enjoyed your life along the way.

As a wealth adviser, my role is to help you gauge your bucket just right to match your needs and enjoy life to the fullest. First Wealth are not just financial planners; we are lifestyle financial planners. The lifestyle bit is important. For us, good financial planning is not just about preparing adequately for later in life, it’s also about giving you the freedom to live for today. We take a holistic approach that asks what’s most important to you, and why. We will help you to understand where you are today, identify your lifestyle choices, and realise where you want to be in the future.

There is a poignant moment in The Bucket List at sunset on top of a pyramid. Carter tells Edward about the ancient Egyptian belief that souls are asked two questions at the gates of heaven: “Did you find joy in your life?” and “Has your life brought joy to others?” If we all made decisions with these questions in mind, perhaps the work/life balance everyone seems to be striving to attain would be realised.

If you need any help in preparing for your retirement, or with any other aspect of your financial lifestyle planning, then please give us a call on 020 7467 2700 or email us at hello@firstwealth.co.uk.

P.S. You may be wondering what’s on my list:

• A family road trip travelling north up the coast of California
• Skiing in Aspen
• A round of golf at Augusta National
• Safari to Botswana (when my daughter is a little bit bigger)
• Trekking in Patagonia

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.