The Question
My husband and I are looking ahead to retirement. I am aged 54 and my husband is 57, what would you advise we should be considering for our next stage?
Andrew’s Answer
This is a very broad question and the answers would depend entirely on the circumstances. However, it is always best to start with an understanding and options. If you are considering retirement, you may have already sought advice around pensions and funding your lifestyle post-retirement.
But, if not, some good financial planning advice should possibly be the first thing on your list (assuming you already have some basic wills or planning in place) and this should include pension advice.
At a minimum, understanding the broad financial brackets in which you sit would make a very big difference to the type of advice that follows.
We may also see taxes change in the near-term following the general election so it is the right time to get a good handle on your circumstances and seek advice on the potential changes in the pipeline as time moves on.
This is where cashflow modelling may help to identify whether an extra year or two of work would make a big difference to your retirement or perhaps how much extra money you may have to fund your lifestyle, later life care and perhaps your children.
Once you have a clear picture of your circumstances, and this is sometimes where some good cashflow modelling advice from a financial planner may help, you may have a better understanding of what you have, what you need and what you can give away or spend.
From a private client perspective, we tend to separate advice into ‘lifetime planning’ and ‘will planning’. If you have more than you need (and want) for the conceivable future then you could consider gifting.
Will planning is what many people consider with private client law – making a will is the obvious outcome. However, you may want to consider how things should be divided between children and step-children; whether there should be protection as between you, for instance in terms of how care fees or remarriage could affect things.
Lifetime planning is generally more immediate. The simplest type of lifetime planning will revolve around gifts – perhaps gifts to children or grandchildren. It can also involve things like paying for school fees or helping to set children up with properties.
The discussion then often revolves around control but from a different perspective – what are your children’s financial circumstances, how are their spouse’s, how secure are the relationships? If you have excess funds, we can talk about making some gifts from excess income (particularly before you retire) perhaps even into a trust where control is appropriate.
There are very many things people in your circumstances might want to consider for a next step but getting some tailored and specific advice must be at the top of the list.
We always talk of trading off three things – simplicity, tax saving and control (the ‘three pillars of compromise’), so having some priorities in mind is helpful when seeking advice.
Andrew Titmus is partner, head of estate planning department and private client solicitor at Parfitt Cresswell
