To borrow from the opening line of Dylan Thomas’ Under Milk Wood: ‘To begin at the beginning’. But where exactly is that? When it comes to financial goal setting most people will plan backwards.

They will establish how much spare capacity they currently have and work forward from there. They’ll ask: “How much can I afford to save for my future?” If you’ve only got £50 left at the end of the month then that’s what’s available for planning. But that’s not going to get you very far.

Is there a better way?

In my view yes. Why not start at the other end? The dead end.

Take the worst case scenario – that you’ll live for a long time. Say to 95. Assume that the last 15 years – from 80 – 95 will be pretty quiet. Your knees have gone, your hips are shot. You can barely climb the stairs let alone Machu Picchu. You get the idea. I refer to this as the passive retirement phase. The annual cost of your life style in this phase will be pretty cheap.

Now take the period of time between 65 – 80. hopefully this will be the fun part of retirement – the active phase. This where you’ve got the time, money and energy to all the things that you’ve always wanted to do. This is active retirement and it’s great fun – but it can be pretty expensive too. But that’s OK, because you don’t want to be carrying oodles of unspent wealth into the passive retirement phase.

Why don’t you dream big when deciding on what this phase looks like for you?

The final phase to calculate is from 50 -65. This will be different for almost everyone. The cost of lifestyle will vary wildly. But again calculate the annual cost. This phase for most people is the engine of their financial future. It provides the financial capacity, the grunt if you like, for the high octane active retirement phase. But – and it is a big but – it is during this phase that there is the greatest competition for resources: children, education, mortgage, business interests.

In order to deploy your resources most efficiently during this phase you’ll need to know what your aiming for.

So having identified the three phases and the costs of your desired lifestyle in each phase (in today’s terms) and how long you you’ll need to maintain the expenditure, you’ll be able to calculate your “number” – after all it’s only maths.

So why is this a better method for planning for the future than just saving how much you have spare?

Well when things get tight – as they undoubtedly will – you’ll have a choice. The choice to  experience some short term pain today or scale back your big plans for tomorrow.

But at least it’s a choice.