Financial planning is a crucial process for ensuring you are living as comfortably as you can be – and ensuring that you will continue to do so. In an economic time mired by cost-of-living crises and wage stagnation, later-life financial planning has never been more important. Addressing your retirement plan sooner rather than later is key to making the right choices for yourself; where, then, should you start?
Managing Your Pension
When discussing long-term financial planning, the first point of address is invariably the matter of pensions. Pension plans are the most important aspect of any post-retirement financial plan, guaranteeing a set level of income for your remaining years.
Pensions are powerful, whether you are a salaryman or a freelance professional; if you have the means, you should be maximising your contributions where possible. You should also give some thought to how you’ll receive your pension after you retire. Some plans are more tax-efficient than others, but can also have some impact on the standard of living you might be comfortable enjoying.
Whatever the size of your pension pot, and however much else you have squirrelled away in savings accounts or stock holdings, it’s what you do with it that counts. You are effectively living on a finite budget once you retire, which requires you to make some advance calculations about what you can afford before it depletes. Doing this ensures you won’t find yourself high and dry, while also giving you the basic tools with which to draw up an accurate weekly budget – including fun money – for yourself.
Your budgetary efforts, even if you work in contingencies for emergencies and worst-case scenarios, will never be adequate for the true worst-case scenario – something none of us should ever have to expect to deal with, but that is an unfortunate possibility nonetheless. This ‘something’ is premature death, either on the part of you or your spouse.
Even as you approach retirement age, your finances are not necessarily in the fittest shape to support everyone you’d like to; it may also be unlikely that you or your spouse can live on one income until retirement. This is where over 50 life insurance can be helpful, as financial support is essentially guaranteed for your loved ones in the event of that worst-case scenario.
Will and Estate
In discussing the financial preparedness and safety of your loved ones after you’re gone, it is especially important to broach the often-uncomfortable topic of estate planning. Everything you’ve worked hard to gain, for yourself and for your family, will need to be bequeathed.
There are sentimental reasons for which this should be solved sooner rathe than later, but there are also pragmatic reasons relating to the size and shape of your estate. For example, without some clever restructuring of your assets and savings, you may inadvertently lose a chunk of your family’s inheritance to taxation.