Call Us On FREEPHONE ~ 0800 193 4080

Home » Later Life Financial Planning » The right decisions for a secure later life plan

The right decisions for a secure later life plan

Making the right decisions for a secure later life.

Learn about making the right decisions when considering your later life plan.

As one gets beyond a certain age the subject of possible retirement recurs again and again. Whilst many people start later life planning when they are young, others give it little thought, leaving it to the last minute. It is never too late to start and the sooner this begins the better. Ask yourself, how you will manage financially once you have retired and lost what is likely your main source of income. It is imperative to keep your finances under regular review, this includes the money you have coming in, savings, any investments in stock and shares or property, debts, and mortgage commitments. Review your pension provision and obtain regular valuations. It is surprising how many people are entitled to a small pension from a job they had many years ago but no longer hold any documentation relating to it. Consider carefully what your income post retirement is likely to be. Will you be entitled to a state pension or other state benefits? Can you gradually scale down your work commitments, which will mean you will still have some regular income? Perhaps you could take out an annuity.

Your Pension Pot

If you have a pension pot (excluding final salary schemes) you are probably aware of how the changes made by the last Government have given you greater freedom in how you decide to access it and when. This is a serious matter and one that can be financially costly if wrong decisions are made so it is important to get professional advice.

Buying an Annuity

Taking out an annuity can be one way of incorporating your pension pot into your retirement planning. An annuity is comparable to an insurance plan and can provide and income for you for life. There are many different types of annuity, taking into account your lifestyle, health considerations and whether you want your partner to continue to benefit after your death.

Equity Release Schemes

Equity release schemes are regulated by the Financial Conduct Authority and allow property owners to raise a lump sum on based on a percentage of the difference between the property value and any outstanding mortgage. The money raised can be used for any purpose and there are no repayments to make because recovery will be made following you death from your estate (sale of the property). There are conditions applying to equity release. You must be over 55 and your property must be worth at least £70,000.

Lifetime Mortgages

Lifetime mortgages are by far the most popular type of equity release scheme. You take out a mortgage on the value you own in your property. Unlike a standard mortgage you do not have to make repayments but interest will be added to the outstanding balance which can significantly increase the overall debt by the time the property owner dies and the debt has to be settled. Life time mortgages do give the property owner the security of knowing they can remain in their home and they will continue to benefit from any increase in property price.

Home Reversion Plans

Unlike life time mortgages, you actually sell a share of the value you own in your home in return from a lump sum. Consequently, no interest charges accrue, although the owning company will benefit from any increase in property value proportionate to their share.

Life Insurance

Retirement planning must include consideration on the extent to which you are insured and any loved ones are provided for following your death. Even those who have left it late to take out insurance provision can do so through one of the many guaranteed acceptance schemes currently on the market. Alternative to life term insurance which specifies a period in which, should you die insurance will be paid, is whole life insurance. Whole life insurance is a more expensive form of cover and is conditional on the person seeking insurance meeting certain criteria. Pay out will be made on the death of the assured providing payment of the premiums are maintained. Like all financial products it is important to consider your own circumstances and what you want insurance for. This could include funeral expenses, a lump sum for a loved one, or a mortgage. You may also decide to include critical illness cover in your life insurance. This will provide a lump sum should you be diagnosed with a specific serious illness.

Funeral Plans

Later life planning should also include provision for your funeral. The cost of funerals has increased enormously in recent years with the average cost forecast to rise to £5000 by 2020. This is why it is good to make comparisons of the best funeral plans.
Most funeral directors will provide a range of funerals at very different prices, starting from what is termed a basic funeral. However, whilst funeral directors can pare back some of their costs by providing, for example, a less expensive coffin other disbursements like the cost of burial and cremation are set by third parties like local authorities. Other aspects of a funeral could include flowers, an organist, the cost of a reception and all these things can add significantly to the funeral director’s fee. More and more people are now making provision for their funerals by taking out pre-paid plans to make comparisons of the best funeral plans is a must and this site enables you to do that and also to find out more about some of the products covered above.

Comments are closed..