A Guide to Future Financial Planning
At 51 years of age I have officially become boring! I’m now more interested in my annual pension statements, when my small final salary pension will come into payment, how much is left to pay on my mortgage, and the final nail in the coffin, I’ve caught myself reading a book on later living.
But, why am I surprised? My experience with clients is that future financial planning becomes more vigorous as the clock ticks down on a “normal” working lifetime, typically 65 – 66 years of age. As your hoped-for retirement age comes into focus how will you plan for the fact that your employment income or self-employed profits will stop and will need to be replaced?
Financial Planning Checklist
Financial planning involves setting a budget. What am I spending now and how is this likely to change when I stop or reduce my working hours?
• What is my essential spend? How much do I need to pay my bills / exist?
• When I stop work, what do I want to do and who do I want to do it with?
• How much are my interests or activities going to cost?
• Do I have any interest or hobbies, or do I need to find some?
• Am I interested in travelling? If so, where to, how often, who with and at what cost?
• What, if anything, do I want to do for my children or family and what might this cost?
Once a budget and a wish list of things to do has been sketched out, what resources do you have available and what might become available? Conducting a thorough search or review of your savings, investments and assets is a good starting point when planning your financial future. Did I have a pension with my first employer, where is it now, what is its value and how is it invested? That’s interesting, I’ve dug out an old building society passbook with £x in the account, what’s happened to that money? My mortgage statement shows that I have £180,000 left to pay but it’s interest only! How am I going to pay off the debt, not just the interest? Should I switch to a repayment basis, will I downsize properties, what is my plan?
Finding out what something might be worth is also a useful exercise. Getting a projection for your State Pension might be very worthwhile (HMRC Gateway or BR19 downloaded form). Are you on track for a full pension, £168.60 per week (£8,767 per annum of currently escalating income) or do I have a shortfall in my National Insurance record? Will I be continuing to save and build my assets whilst I’m working and what is a realistic projection of what these savings will be worth when I stop work?
On the assumption that you have an agreed budget, you have a loose plan and you have pensions, savings and investments, do you have enough to do what you want to do, or will you run out of money? Arghhhhhhhh!!!!! What next?
To execute a successful financial plan for the future, ideally, you need a cashflow plan. A cashflow plan will capture expenditure, both regular and one-offs, both boring (bills) and exciting (holidays/celebrations). It will identify your streams of income, your savings and assets. It will recognise taxes – income tax, national insurance, capital gains tax, inheritance tax etc. It can show you if you will run out of money at age 100, 95, 75 or 65 years. It will highlight if you need to work for longer than you had anticipated to do the things you want to do. It will flag if you need to rethink your goals and aspirations – I am now holidaying in Blackpool rather than the Maldives due to my limited budget! It can also demonstrate that you are in a stronger financial position than you had anticipated so that you can stop work earlier than perhaps you initially thought.
How Can Wingate Help You with Future Financial Planning Activities?
Wingate is a planning lead business. This means that planning is central to any advice that we deliver. We are interested in understanding what you want to do, when you want to do it and how much it will cost (your budget). We can formulate a personalised cashflow plan and an overview of your current position for you to see where you are in relationship to realising your plans and goals. We would provide you with any necessary recommendations to get you on course for achieving your plans and goals and going forward, monitor your progression on an annual basis to ensure you remain on track.
So, to kick start your future financial planning, contact one of the Wingate advisers and make your financial plans a reality.