When we think of pocket money, it often takes us back to our childhood days when our parents would give us a few “bucks” for little treats or personal expenses. But what if pocket money isn’t just for kids? In fact, it can be a great concept when it comes to planning for retirement.

You might wonder, “How does pocket money fit into retirement?” The expectation of a financial adviser is to point out the areas where the person is spending but call it overspending; and to ensure that more funds are available for investment, “to provide for a rainy day”. But when I ask my client his indulgences and also help fund those, I see a spark of understanding in their eyes.

Imagine a world where your retirement years are like a blank canvas, waiting to be filled with vibrant experiences, cherished moments, and make long-held dreams come true.

Your retirement is this canvas, and it’s so much more than just stashing away a substantial sum of money and calling it a day. It’s about embracing a new chapter of life, one that offers you the freedom to explore, indulge, and savour the fruits of your labour. It’s about making each day count and ensuring that your journey into retirement is as enriching as the destination itself.

The suitcase of retirement

To understand the concept of pocket money in retirement, let’s imagine your financial resources as a suitcase. This suitcase is your companion on your retirement journey, holding your life’s savings, investments, and financial assets. Think of it as a well-organized suitcase with different compartments, each representing your unique financial goals.

As you set off on this exciting journey, you’ll encounter various expenses and destinations. Some are like essential pit stops—housing, healthcare, groceries, and utilities. These are non-negotiable expenses, the equivalent of fuel for your journey. These are not pocket money: they are the funds you need to ensure you reach your next destination comfortably and securely.

The special pocket

But how about creating a small niche, a special corner for the fun stuff. Let’s call it pocket money. This money isn’t reserved for life’s necessities, but it is your ticket to the smaller joys and spontaneous adventures of retirement. This is the fund to be used for buying your favourite ice cream on sunny afternoons or rainy days, taking unplanned detours to beautiful places with close friends and family, and enjoying delightful encounters that make life extraordinary.

As a financial adviser, I’ve had the privilege of helping my clients plan for these moments. We set aside a portion of their retirement savings for discretionary spending—much like pocket money for their journey. This money adds excitement to their retirement; and to ensure that they do not feel guilty while indulging—be it a meal at a fancy restaurant, going on a dream vacation, or pursuing hobbies that bring pure joy.

But, just like the pocket money you had as a child, it comes with responsibility. You can use the money you got immediately or accumulate it every week so that you can freely indulge in a pursuit that will give you total joy. We talk about budgeting and planning for this special fund, making sure it lasts throughout the journey without risking financial security. It’s about finding the right balance between fulfilling dreams and meeting essential needs.

An unforgettable message

It is very important to understand that life’s journey doesn’t end when we retire: you can think of it as the intermission in your film of life. The second half can be more exciting or more boring or more challenging. By setting aside pocket money, you ensure that your retirement is filled with moments that bring happiness, just like when you were a child; all while keeping your journey safe and secure.

So, as you think about your retirement plans, remember it is not just about saving for the future; it is about living fully in the present. It is about enjoying the thrill of earning your pocket money all over again.

May your retirement be a tapestry woven with unforgettable moments and dreams brought to life—because in this adventure, age is just a number, and pocket money is your ticket to a lifetime of joy.