While it is believed that Brexit will have a detrimental impact on the value of UK pensions, this financial product has always been the source of considerable volatility and controversy. Just recently, the government was accused of failing to react to the closure and liquidation of certain employers, causing pensioners to miss out on a pay-outs of up to £465 each week.
In truth, however, retirement planning is just one of the many financial challenges that you are likely to face in later life. Understanding these is the cornerstone of a bright financial future, and one that helps to provide genuine security.
Counting the Cost of Future Care: The Key Considerations
With this in mind, let’s look at the key considerations to keep in mind when planning for your financial future after retirement. These include: –
The Importance of a Pension Plan
Let’s start with the basics, as a viable pension plan helps to provide you with regular income during your retirement. A typical state pension only goes so far, however, so it is important that many people also invest in a private scheme, like a SIPP, that solicits contributions both from yourself and an employer. This will optimise the funds at your disposal, while also affording you greater flexibility when investing this capital.
The Potential Cost of Care
Even the most lavish pension plan may not prepare you for the rigours of care, whether you need to enter a residential home voluntarily or provide accommodation for a loved one. The cost of private residential care can be prohibitive, at least without expert guidance and forward financial planning. Fortunately, services are available to help you to make the necessary preparations for such an eventuality, as they can calculate and estimate your potential care costs while also explaining the intricacies of power of attorney.
Such help can be a godsend, particularly when you consider the emotional turmoil that can be caused by physical and mental illness.
Managing your Estate and Funeral Costs
On a final note, you will also need to make proactive plans for your financial estate and funeral costs in the event of your passing. In terms of the former, look to create a legally binding will at the earliest opportunity, as this will help you to distribute your estate and ensure that all of your loved ones are taken care of. When it comes to funeral expenses, which in some instances can reach up-to £1500, you may want to check with your insurer as some life insurance policies cover some of the associated costs.
Investing in estate planning can help with this process too, as this will enable you to optimise the level of capital that you are able to leave to your loved ones. This can also help to minimise other costs such as inheritance tax, so this is something to consider regardless of your long-term, fiscal legacy.