Lockdown has changed our perception in many ways. So, to look at what it might mean for retirement, here are some thoughts from Jeremy…
At the start of lockdown, I read an interesting article by a fellow financial planner. He had pondered whether life in lockdown would be a vision of the future – in the sense that with so much time on our hands and limited ability to spend money, maybe lockdown was some sort of ‘dry run’ for retirement?
In recent weeks, we’ve not been able to do many of the things that we would have liked to. It’s easy to draw parallels between lockdown and retirement in that there are constraints on how and where we can spend our money.
Most clients that come to see us have a ‘pension problem’ or an ‘Inheritance Tax problem’. However, ultimately, all most people want to know is: will they have enough money to do the things that they want to do now and in retirement?
For most of you, thankfully, the answer to this question is ‘yes’. However, it may surprise you to learn that, in many instances, we actually find that our clients don’t plan to spend enough during their retirement!
As financial planners, we are focused on helping you to live the best life possible with the assets you have.
This means being able to show you in a straightforward and engaging fashion what your future might look like based on prudent assumptions.
Frequently, we come across clients who will die with large estates which, whilst benefiting their families (and the taxman), often come with a sense of regret about the experiences that were not had earlier in life (missed holidays, time spent with the grandchildren etc.).
Lockdown has taught many of us that missing out on time spent with loved ones and creating memorable experiences are the things in life that we will regret not being able to do when, through old age, we no longer have the ability to do them.
These are the things that provide us with the vivid memories of fulfilment and satisfaction, not buying more material goods that provide only a fleeting ‘high’ which is soon forgotten.
Rethinking your plans after lockdown
As well as changing your outlook in the future, the economic impact of the pandemic cannot be overestimated. It’s likely that millions of workers in the UK will lose their job as a result of lockdown, from business owners and pilots to retail staff and senior executives.
Even if your job is secure or you have successfully navigated your business through lockdown, you may still be thinking of ‘doing things differently’ when we return to something approaching normal.
If you are in this position, you may have been forced to confront the idea of ‘what do I do next?’ Or, time to reflect may have brought up the same question. Maybe:
- You have worked hard for many years and you feel that now is the time to get off the treadmill
- You have seen friends or family struggle with Covid-19 and realise that you want to do more with your life
- You have enjoyed a slower pace of life and realised just how much you don’t particularly enjoy your job
- Your spending has reduced as a result of the lockdown and you’ve realised you can financially afford to change your lifestyle.
Many pension savers have chosen to access their pension earlier than expected. Research from Aegon has found that one in eight (12%) of those aged 55 and over, who before the coronavirus pandemic hadn’t accessed their pension, have now done so. A further 8% have considered this option.
However, there will be people for whom lockdown will have been the opposite experience. Perhaps lockdown has given you a glimpse of what your life might be like during your retirement and you’re not yet ready for that step?
Maybe you haven’t enjoyed having extra time on your hands, and you’ve realised that you really want to keep on working?
How advice can add value if your plans have changed
The events of 2020 might well have led you to rethink your plans. Whether you are thinking of working longer or retiring earlier, seeking advice on the financial implications has never been more important.
With a greater choice of retirement options than ever before, and potential tax and income consequences for making poor decisions, good advice is crucial.
If you are interested in getting the best life possible from the assets that you have, please get in touch as we would love to help. Email firstname.lastname@example.org or call us on 01189 876655.
And, remember, precious time is slipping away.