Planning for Later Life

Planning for retirement is one of the biggest investments you can make – not only for yourself, but your loved ones as well.

Planning for Your Future

Are you prepared for later life?

Welcome

Planning for later life is one of the biggest investments you can make – not only for yourself, but your loved ones as well.

The COVID-19 pandemic has generated much uncertainty. There’s no time like the present to gain control, plan ahead, and protect your family, your peace of mind, and your wealth.

We recently looked into whether the pandemic has affected people’s attitudes to planning for later life. The findings of our survey were worrying – there's a clear lack of understanding of what people need to do to be ready for their future.

So what steps can you take to protect your future?

This guide explores the key issues you could face when preparing for your future, and offers you practical and effective ways to plan ahead.

Putting plans in place with legal and financial support from our experts means you can focus on creating memories with your loved ones, with the assurance that your affairs are taken care of.

Emma McCann

Partner, Tax, Trusts and Estates

Have you prepared for your future?

In our recent webinar, our team were joined by former RAF flight lieutenant and rugby legend Rory Underwood, to discuss how you can start planning for your future now.

Watch the webinar

The Current Situation

What do the survey results tell us?

The Current Situation

Protecting the wealth you've accumulated often becomes a priority as you get older.

Planning for retirement is something many people tend to put off, even before we entered into the uncertain and challenging times that COVID-19 has presented.

In our recent research with YouGov, we asked adults aged 40 and over about their attitudes towards saving money and planning for retirement, and how these might have changed through the pandemic.

The survey uncovered a range of findings and key indicators of which groups are more likely to prepare for their future. It also showed which groups are more likely to slip through the gaps, including geographical, gender, age and social differences.

Key Findings

Though none of us like thinking about getting older, it's important to think about how these changes will affect our lives.

Our survey showed a woeful lack of later life planning for people aged 55 and over.

54% of those aged 55 and over stated their plans hadn't changed because of the pandemic. But this exposed a worrying statistic – 21% of this same group have no retirement plans whatsoever – despite being only 10 years from the state pension age.

Even more concerning, 38% of this group don't know what income they need to retire.

These results show a huge underestimation of how much planning for later life will cost. They indicate that many haven't saved enough over their lifetime to be able to retire to the lifestyle they expect.

The pandemic has certainly changed everyone's plans to some extent, as demonstrated by some respondents saying they'll now be retiring later as a result of the dramatic events of 2020.

It’s an indication that many don’t have enough saved up for retirement, and that people would benefit from talking to a professional to see what options they have.

The fact that more than a fifth of respondents have no retirement plans at all is yet more evidence that the government needs to step in now to make sure there's not a generation of people who are left working longer for a less comfortable retirement.

Our expert financial planner Jason Mountford said: "Many people think
that financial planning doesn't apply to them because they're not wealthy enough to justify it.

"Financial planning is more than just what to do with cash in the bank. Cashflow planning is vital to understand the lifestyle people can afford in retirement, while still aiming to have money left over."

People think financial planning doesn't apply to them because they aren't wealthy enough to justify it.

Why Plan Ahead?

Find out why preparing for a financially healthy future has never been more important.

Why Plan Ahead?

There are several end goals to successful planning.

Your goal could be making sure you have enough money to keep living the lifestyle you're used to. Or perhaps it could be ensuring that if you need specialist care when you're older, you'll be able to choose based on what you want rather than what you can afford.

Whatever your values, it's important to ensure they're protected as you get older.

It's easy to put off, but the sooner you get started, the harder your money can work for you, and the better off you and your loved ones will be, in more ways than just financially.

Five Reasons to Plan for Your Future

1. Manage your wealth now and in the future

Reviewing your situation now can help you achieve your financial goals in the future. Clearing any overdrafts or debts, and understanding how your workplace pension scheme or personal pension work is a good foothold to begin building the foundations you need to achieve your future goals.

Starting early and saving a few pounds here and then doesn't sound like it will achieve much, but the power of compound interest isn't something to be underestimated.

2. Retire with security

You may have big decisions to make when planning to retire. That could be how to build your pension, or helping your children pay for university or taking their first step on the property ladder.

It can be hard to know how these decisions might impact your financial security in retirement, so seeking clear and concise financial and legal advice would help ensure that you can do these things without compromising your own future.

3. Planning for care

What kind of care do you want in later life?

If you were to need care, would you prefer to stay at home and receive care there, or would you prefer to be looked after in a nursing or care home? Considering your future care needs, what options are available to you, and how much they cost could help shape your attitude towards saving for later life.

5. Lessen the stress for your loved ones

Early planning will help effectively manage your estate for future generations.

As people grow older, their ability to effectively manage finances, taxes and assets can be affected. Determining who would make decisions for you, should you lose the capacity to do so, is one of the most important decisions you may face, and shouldn't be left to chance.

4. Protect you and your family

Managing your affairs can become complicated. From ensuring your estate is inheritance tax efficient to protecting your wealth for future generations, to well-drafted Wills that make your wishes clear, it's important to leave no stone unturned.

Considering legal provisions to preserve your family finances early on won't only protect your assets, but also your peace of mind that it's already taken care of.

How You Can Start Planning

Read our expert advice to find out how to prepare for a more secure future.

Financial Planning for Now and the Future

Expert financial planner Jason Mountford shares what you can do to gain control of your financial future.

Thinking about financial planning for retirement can easily be waved away as something you don't need to think about until you're older, but starting as early as possible radically reduces how much you'll need to put aside.

Plan, implement, review, repeat

Create a financial plan with clear objectives for your personal retirement needs, and understand what action needs to be taken to achieve them
Implement the plan to start building towards those objectives
Review the plan to ensure it's on track, and can cater for any change in circumstances
Repeat – continually going over this process keeps you in control of your financial future to achieve the retirement that you want.

Tips from the inside track

Maximise the use of your tax allowances and reliefs. Many people could save money simply by utilising their allowances and reliefs on the money they already have
The Chancellor is likely to announce some big changes to taxation this year to help pay for the cost of the pandemic. Make sure you have reviewed your finances before then to ensure you maximise your reliefs as they may disappear.

Not all relationships last forever

Expert in family law Sarah Balfour explains how and why to protect yourself and your loved ones in case of relationship breakdown.

Increasingly couples are choosing to enter into agreements in case their relationship breaks down. Family asset protection agreements can protect the assets that are important to you, and enable you to make provisions for children and other family members.

Passing down wealth

Have you passed, or are you thinking of passing, on any gifts/wealth/shares to your children or grandchildren? If so, do you think it would be worth ensuring that these monies are kept within the family?

This can be done by way of a wealth protection tool – like a living together agreement or prenuptial agreement. Specific guidance is available for when you're looking at succession planning and passing down wealth. The aim is to protect your money in both the short and long term.

Getting married

Another question is really around whether you or a member of your family is getting married, particularly if this is for the second or third time. Whilst it's really tricky to think about – when all you want to do is quite rightly focus on the wedding – consideration of a prenuptial agreement is very important to protect wealth and potential inheritance for children, grandchildren or loved ones.

Living together

If you're living with your partner, or a loved one is about to move in together with someone on an unmarried basis, it's important to consider all eventualities.

We know this isn't something you want to think about, but have you given any thought to what would happen if your relationship ended – if one of you were to pass away or if you simply decided to separate? A Will is crucial to protect loved ones after a death, but also a Living Together Agreement is an incredibly important wealth protection tool, when you live together but choose not to marry.

Protect Your Loved Ones

Expert in estate planning Emma McCann shares five tips on how planning for your future helps your loved ones, too.

Make both types of Lasting Power of Attorney (LPA)

So many people don't consider an LPA until they already have a dementia diagnosis. By the time this diagnosis has been reached, it can be too late to make an LPA. It also doesn't cover quick deterioration, for example a stroke. Again, there are many misconceptions with LPAs. Many people believe their spouse can deal with their affairs, and don't understand the complications that come with joint assets.

Make LPAs for both Financial & Property and Health & Welfare matters as soon as possible, so you get to choose people you can trust to act in your best interests as your attorney. It's an important role, so carefully choose people who you know will work well together. Appointing your own attorneys now will undoubtedly be the most affordable and safest course to avoid a situation where nobody is managing your affairs, should you lose capacity to do so yourself.

Make a Will

If you pass away without making a Will, the rules of intestacy dictate how your money and assets will be distributed. It should never be assumed that the intestacy rules will cover your specific situation. There are common misconceptions about these rules, where not taking advice could easily be detrimental to your estate. Appointing an executor can be just as important as setting out how your estate should be distributed.

Even if you already have a Will, you should review it regularly to make sure it's still relevant to your personal situation and circumstances.

Get a cashflow analysis completed by a financial adviser

This will guide you on monthly outgoings and income. The importance of this shouldn’t be overlooked. It can help indicate when you can retire and support you in managing funds effectively in later life. A financial adviser can help you health check your financial position now, which could reveal the potential for your assets to work harder for you and produce greater yield in the long term.

Plan for what happens next

Lawyers are often accused of playing devil’s advocate and coming up with too many "what if" scenarios that may never happen. However, it's better to have covered these scenarios; to have planned for the worst and it not happen, than not to have covered them and try to deal with things retrospectively, when it could be too late and very costly.

It's not a pleasant thing to think about, but it's practical. Talk to your future attorneys and loved ones about your preferences and plans for later life, particularly in terms of the type of care you'd like if you needed it. Having those closest to you aware of your wishes will leave them better placed to support you in the future if you need it.

Take advice on gifting and managing your estate

One of the better known rules on tax and gifting is the seven year rule. But many don’t know about and/or understand the gift with reservation of benefit rules. Enquiries from people who want to gift property to their children are really common, but they often don’t understand the risks associated with this. They're also usually unaware about the deprivation of asset rules.

To avoid pitfalls like these, act now and take legal advice for your estate planning. This goes above and beyond making a Will – taking tax planning advice will ensure that your financial position is secure and managed as efficiently as possible, for maximum benefit to your beneficiaries. This is a step you can take now to protect your assets going forward.

Taking a Practical Look at Later Life

How do you want to be cared for in later life, and who's going to pay for it? Later life expert Stewart Stretton-Hill explains the benefits of proactively planning ahead.

Many care decisions tend to be last minute and unplanned because the need for care can be immediate and there's no
time to explore alternatives.

Being aware of the care homes in your or your loved ones area, and making enquiries into their facilities, offering
and costs can be really helpful in planning ahead. This can give an idea of care fees and how your preferred home may compare with others, and whether it's affordable.

You could request a copy of their terms of business to gain an insight into their offering and whether you're comfortable with it. If you feel strongly about where you spend your final years and you want to stay in a particular area, consider this now and note your preferences in both a health and financial Lasting Power of Attorney, as guidance for your attorneys.

Take advice

Cash flow/financial planning – this will be beneficial in assessing how care will be paid for and planning for this
Consider funding options – for example are you entitled to NHS funding? Would a care annuity work?
If a property is sold take financial advice – many clients just place the sale proceeds in a high street bank and it doesn’t cover inflation
Take advice on the care home contract – there can be unfair terms in the contract which can penalise the client
and their families. Think of it as a house purchase - you wouldn't sign a contract for purchasing a property without taking legal advice.

Later life care is increasingly expensive, easily running into the tens of thousands each year, with many facing the prospect of selling family homes to pay for it.

Later life planning is one of the most important things to plan for, yet it’s almost completely forgotten about – or unfortunately not even considered, making it extremely difficult to get the kind of care you want.

Stewart Stretton-Hill
Senior Associate, Tax, Trust and Estates

Your Key Contacts

We're here to support you, whatever you need.

Emma McCann

Partner, Tax Trust & Estates

T: +44 (0)114 294 7807
M: +44 (0)7918 742 250
E: emma.mccann
@irwinmitchell.com

About Emma

Jason Mountford

Financial Planner

T: +44 (0)161 259 0801
E: jason.mountford@irwinmitchell.com

About Jason

Sarah Balfour

Partner, Family Law

M: +44 (0)7801 894 954
T: +44 (0) 121 2145451
E: sarah.balfour
@irwinmitchell.com

About Sarah

Stewart Stretton-Hill

Senior Associate, Tax, Trusts and Estates

M: +44 (0)7795 294310
T: +44 (0)1635 571049
E: stewart.stretton-hill@irwinmitchell.com

About Stewart

All financial and wealth management services are provided by IM Asset Management Limited which is authorised and regulated by the FCA. FCN 402770.

Next Steps

Our later life lawyers and financial planners have a great depth of expertise specialising in tax, trusts and estates, Wills, financial management, and family law.

Where required, we can also offer our expertise in areas such as wealth and investment management, conveyancing and Court of Protection – any of which may become relevant to later life planning. We’ve taken the time and investment to build a team of specialists who are leaders in their field. They not only offer expertise and technical excellence, but a responsive service and friendly guidance.

Have you prepared for your future?

In our recent webinar, our team were joined by former RAF flight lieutenant and rugby legend Rory Underwood, to discuss how you can start planning for your future now.

Watch the webinar