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Later Life Financial Planning: What is it and Why is it Important?

If you’re approaching retirement, then you’ve most likely dreamt about how you want to spend your time. But have you given due consideration as to how you plan to finance this new lifestyle?

Later life planning kicks in at the point where you’re typically shifting from accumulating funds to spending them. But it doesn’t end there, managing your finances should continue throughout your retirement as you make adjustments along the way to account for your changing needs.

Thanks to advances in medicine, we’re living longer, healthier lives. According to the Office of National Statistics in 2018, a man aged 65 could expect to live for another 18.6 years, while a woman could expect to live for 21 more years. So, on average, at age 65 years, women still have a quarter of their lives left to live and men just over one fifth.

Here’s a thought: your retirement may very well last longer than your career.

Have you planned ahead for the next 20-30 years?

There are many things to consider when it comes to financing your later years from your own life needs and that of your partner, right through to your legacy aspirations and with life expectancy at a record high it’s important to make sure you have sufficient wealth to last.

Here are a few key questions to ask yourself and discuss with your financial adviser:

  • Are you making the most of your tax efficient savings?
  • Will your pensions and savings pot match your retirement expectations?
  • Are your current investments appropriate?
  • Have you factored in the unexpected, such as financing long-term care, should you need it?
  • Do you want to preserve your wealth to leave to your children?

The complexities of the many decisions you or your family may need to face as you age will benefit from careful and considered financial advice. Our advisers can show you how to best achieve an acceptable target level of return within a portfolio of savings and investments to pay for the retirement you want.

Tax efficient returns

Starting with your current savings, be sure to make full use of tax wrappers to benefit from tax allowances including Capital Gains Tax (CGT) and personal tax allowances.

We understand that after a lifetime’s hard work building a financial portfolio you want to protect your wealth. Later life can expose your portfolio to three key taxes - income tax, CGT and IHT – and we’re here to help you to optimise tax efficient returns.

Pension pot

Is your pot looking healthy? Personal contributions to a pension currently qualify for income tax relief at your highest marginal rate. High earners can also reduce taxable income significantly through pension contributions. You may also be able to carry forward unused annual allowances from the previous tax years and optimise Lifetime Allowance protection opportunities.

Portfolio management

Later life planning doesn’t end when you retire, quite the opposite; it’s an ongoing endeavour making adjustments to cater for your changing needs. This will undoubtedly mean a scaled reduction in risk, potential restructuring to suit your tax position and transitioning from capital growth to income. Homecroft will be there to best manage the volatility and sequencing of returns and provide ongoing monitoring to cater for your changing circumstances.

Equity release

Another thing to consider is releasing the value in your home. Equity release is a way to unlock, what is for many of us, our most significant asset and turn it into a cash lump sum to enjoy retirement or help adult children access their inheritance sooner to get on the property ladder themselves. There are two main options - Home Reversion Plans and Lifetime Mortgages - both of which enable money to be released from your home while you stay living there.

Preserving wealth for your children

Later life planning takes into account asset protection and minimising IHT exposure so you can transfer wealth tax efficiently to the next generation.

The decisions you make today will, in large part, determine your retirement and whether you can finance your desired lifestyle. We understand that having sufficient capital to provide income and cash to meet your needs, whatever they are, both expected and unexpected, is important and we’re here to help.



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