Every day brings a new and exciting ache
What is your end game?
We know that our working lives are being extended all the time. You only need to look at the rising age at which you can draw your State Pension to confirm this. The reality is that time is ticking on and planning for what happens when the kids really have left and that the urge to work hard at the daily grind may wane. Some will deny this and others would embrace the day they can stop work tomorrow...even this evening. There’s still the mortgage to repay and keeping fit to make sure you can make it to the winning line is a focus, to make sure you have time to enjoy yourself once you’ve finally stopped work.
Ageing parents may be a concern and that last house move or promotion may be a pressing objective. If you took the leap and set up your own business, the need to ‘make it happen’ never leaves.
So, what should you be thinking about for your financial planning and why is good advice now crucial?
What does your end game look like and how much will that cost? The thought of spending 20 years in retirement to some is horrendous, and some like the thought of part time work, both to subsidise income and to keep the grey matter stimulated.
What should you do?
Make a will
Use a solicitor – it’s an important document and you want to get it right. If cost is a real issue, you could use a Will Kit, which is available from any good stationer.
The legal profession sometimes run a ‘free wills week’ and you might want to have a look out for this.
Check your (and your partner’s) State Pension entitlement
The State Pension is a valuable source of index-linked income in retirement. It’s a great idea to check what you might be entitled to when you reach State Pension Age – many people expect to receive the full amount but may find that they haven’t built up enough National Insurance contributions over the years. It is good to be prepared – and if you have a shortfall, you may be able to top this up. You can check your State Pension here.
Check your existing pension benefits
It’s likely that by now you will have built up a range of pension benefits through the different jobs you’ve held, and maybe through your own pension savings too. No matter how small they are, it’s important to make sure the funds are invested in line with your attitude to investment risk and it’s also worth checking the charges that you’re paying on each plan.
Don’t forget to check the death benefit nominations on your pension plans as well – you may have last made them when you were without a partner, or kids for that matter.
Think about plans for your house
Once the children have flown the nest, do you plan to remain in the same house you’re in now? You may no longer need all that space (and the work that goes with it). If you are planning to downsize, have a think about where you want to live, what type of property you’re looking for and how you will invest the surplus cash. Do you need to generate additional income from it? Will it be a ‘nest egg’ for possible long-term care costs in the future? Or maybe you’re still subsidising the kids...
Can you really retire now?
You may want to – but is it really possible, given your financial commitments? Retirement might look like a far-away dream at the moment – however, with careful planning, it might be closer than you think. As a starting point, make a list of what you see as the barriers to retirement (still paying off the mortgage, paying school fees, paying off debts etc.) and the timescales for these.
Alongside this, work out the sources of income that might be available to you in retirement and when these will kick in.
What about your other savings?
You have probably built up some cash savings by this stage, maybe from regular savings or from an inheritance or gift. It’s important to keep cash savings equivalent to around 3-6 months’ income as a minimum in readily accessible funds so that it’s easy to get to in an emergency.
If you’ve built up more cash than this, is it working hard enough for you? Check out the interest rates available on the high street and don’t forget about other cash-type investments such as NS&I Premium Bonds. If you have cash on deposit that you know you won’t need in the short to medium term, you might want to think about investing this to help you meet your goals.
Whether it’s cash or stock market investments or both that work for you, remember to use your tax efficient ISA allowance every year: it’s a great opportunity to shelter at least a bit of your cash from tax.
We hope you have been inspired to take action for your financial planning from the notes above. This SaidSo free guide is for guidance only.