A part of this conversation is making sure all available tax reliefs and allowances are being used effectively and between spouses/civil partners, and assets are owned in the most tax-efficient way.
FTA: Do people understand what income they need in retirement? How will this change?
RW: Many people enjoy the opportunity to travel and pursue active hobbies in the early years of retirement and spending tends to be higher to reflect this.
Although spending on active pursuits may fall in later years there may be a need for care, either at home or residential, which presents a significant income need.
A cash flow model is an excellent method of looking at spending over the long term in the context of the client's overall financial position.
FTA: Should clients be repaying debt?
RW: Maintaining debt requires careful consideration after earnings cease. They should consider how comfortable they are with maintaining debt in retirement - for how long and at what level? Where will income to repay the debt come from?
FTA: Do they need to understand risk?
RW: Planning for retirement should include a reappraisal of investment risk tolerance – has your attitude to investment risk changed? Can you afford to take risk or are you relying on the assets you have to support you for the rest of your life? How would your lifestyle be affected if your investments and pension fell in value?
FTA: Often we focus on investing for income, but what else do clients need to protect their family in retirement?
RW: Life assurance provided through an employer will end at retirement. Consideration should be given to the particular family situation and if ongoing cover is required.
Life assurance also forms part of discussions about estate planning and providing a capital sum to pay a potential inheritance tax liability on death.
