You May Have Had A Risky Job, But Do You Really Want A Risky Retirement?
As we approach retirement, the plans we made years before become increasingly important. That armed forces pension you’ve accrued, life assurance policies, ISAs and other investments you’ve made over the years, really now have to be fit for purpose.
In fact, having made significant personal sacrifices by joining the Marines and doing a high-risk job, you really do deserve to have a financially secure retirement. So will you?
Now is time to make sure there is no mismatch between your plans and policies and your planned retirement. Can you afford to retire and live the lifestyle you want? Is the money you have invested working hard to achieve these goals or could it be doing better? Furthermore, are you overexposed with investments that are too high risk at this stage of your life?
Investments always carry some risk. There’s the potential to make significant gains, but there is also the prospect that you might lose. Typically most of us feel more comfortable investing in higher risk products when we feel that time is on our side. We know that interest rates will fluctuate and market prices too, but spread over several years we can stand a reasonable chance of recouping any losses and pocketing any gains.
However with retirement approaching, time is not on our side. Therefore you may have investments now that are unsuitable for your future plans, which carry too much risk if your circumstances change.
- What if you want to stop working earlier than previously planned?
- What if you become ill?
- What if you die prematurely and leave dependents?
- What if you want to buy a home later in life?
Will your current plans and policies accommodate the ‘what ifs’; and is the investment risk manageable?
In my experience many people have investments and other plans that are not aligned with their desired retirement or their age and circumstances. You may have been a risk taker when you were younger in the peak of health with retirement far from your mind, but since then your attitude to investment risk may have changed.
So now is the time to review all of this and if necessary explore alternatives that are a better fit with your current circumstances and retirement plans.
A Wealth and Income Report is your first step.
This will analyse your existing plans and policies, and see if they are fit for purpose. Taking into account factors that may have been unknown previously such as health, desired lifestyle, property ownership etc., a Wealth and Income Report will help you see if there’s mismatch between your finances and your retirement plans.
It will also look at tax, charges and penalties, and what other options are available; providing an in-depth analysis of the your current financial situation and projected income for retirement.
With the Wealth and Income Report it is then possible to run a risk analysis and compare the two. This will reveal whether you are overexposed, and also take into account any changes in your attitude to risk.
If there is a mismatch, you can do something about it and get your plans back on track. Often adjustments can be made such as changing your planned retirement age by a few months or years, putting more in your pension pot, or diversifying your investments to spread risk.
If like many people you haven’t looked at your plans and policies for some time, you won’t know whether there is a mismatch or not. That’s why I’m offering all serving and former Marines a free Wealth and Income Report to give you a comprehensive view of your financial situation.
As a former Marine myself I know that the rewards of serving can’t be measured in salaries and pensions, but that doesn’t mean you shouldn’t have a secure financial future.
Mr and Mrs S, north Hampshire needed to start mitigating for inheritance tax. It was recommended that they set up a trust arrangement. This would put £200,000 outside their estate, but allow them access to an annual maturity from the trust, if they required it.
That was more than 13 years ago. The trust investments are now valued at £483,000 and have been held outside the client’s estate for many years. This has saved £193,000 based on today’s value, in potential inheritance tax.
Mr & Mrs B, Solicitor & Judge and a retired teacher
Mrs B had been the sole beneficiary of her mother’s estate. On my recommendation, we arranged a Deed of Variation, which meant that Mrs B changed her mother’s will to set up a trust instead of the estate going to Mrs B.
The trustees decided to meet twice a year to review the investments and to make any plans to spend the capital. The trustees decided that apart from Mrs B, the trust could make discretionary payments to family members for educational purposes. The trust also makes small gifts at Christmas.
The result of this planning is that the £250,000 placed into trust is not, and never has been, part of Mrs B’s estate. The trust is valued at £371,000, has paid a regular income to Mrs B, plus she has taken regular lump sum payments for holidays, amounting to £20,000 over the last two years, since retiring. The effective saving in inheritance tax is more than £160,000.