In Retirement - What to consider in later life
Friday 18 March, 2016
As some of the pension decisions you make now may not be reversed later, it is important you make the right choices and shape your retirement plans to best meet your individual needs and circumstances. Each week leading up to the Budget in March we will be adding pension articles from our brochure – Your Retirement Options - Freedom & Choice: before, at and in retirement to help you make sense of the new pension changes. Allan Ross, Financial Adviser, Ware, reviews what to consider in later life.
What to consider in later life?
1. Review your Lonsdale Lifetime Financial Plan to ensure it is fit for purpose and can meet any increased income needs for potential care costs or hospital expenses.
When we review your Lifetime Financial Plan your Financial Adviser will discuss the following with you:
Does your pension allow you to continue to draw your pension income tax-efficiently?
Does your legacy & estate planning instructions enable you to pass wealth to your dependents where appropriate?
How can you release further income to pay for potential care costs?
Is your will and power of attorney up-to-date?
Case Study
Peter – 80 years old – retired surveyor Defined benefit pension scheme – £20,000 p.a.
Anne – 83 years old - Full state pension.
Savings and investments valued at £50,000.
Dependants – one daughter aged 60 (3 grandchildren).
No mortgage on their home.
Key Considerations
1. Do Peter and Anne have enough money to cover potential care costs?
2. Can the couple afford to gift income to their grandchildren to pay for university fees?
Allan Ross, Independent Financial Adviser, Ware, said:
‘As a priority I would prepare a Lifetime Financial Plan for Peter and Anne and review their current and future income and expenditure. As we know the current value of their home, I can model various different assumptions for them to show how certain decisions would affect their cash flow, tax situation and care provision. I would consider how much income they require if they both needed care provision and/or if one of them went into a care home and the other sold the family home and purchased a smaller home. I would also model how much income they could afford to gift to grandchildren.’
Conclusion
By reviewing their finances the couple have reduced their income tax liabilities and potential inheritance tax liability. Although it was difficult for them to discuss the possibility of long-term care, reviewing all the options and costs was positive as they now feel confident that they could both afford to go into care if necessary, and gift a small amount to each grandchild when they reach 18 years of age.
