In this final instalment of our age-related articles, it is now the turn of the more senior members of our communities – all of you in your 70’s and older. This group have some very specific financial challenges, so here are some thoughts on wisely managing your financial affairs.
A decline in health costs money, no matter what support you get from insurance policies and the state. Your house may need to be modified, you may need to pay carers, you may need to install expensive equipment etc. There are a whole range of areas in which ill health costs money.
While of course this is not fully under your control, do everything you can to stay healthy. Eat well and continue to exercise as much as you can, even a short walk every day makes a difference. Look after your mental health too – maintain social contact with family and friends and keep your hobbies and interests going as much as you can. Staying healthy will be a boon for your finances.
Help yourself make sound financial decisions. When you are making decisions where there are sizeable sums of money involved, do your research. This might be a significant purchase or getting some work done around the house. If you’re not comfortable doing this research yourself, ask a trusted family member or friends to help you. There are loads of great resources available on the internet to help you make better decisions. If you don’t know where to find them, ask someone who does.
Unfortunately there are always less savoury characters in our society. There are countless stories of people targeting elderly people in their homes with a range of scams, usually under the pretence of doing some “much needed” work. However this usually results in shoddy work that is hugely over-priced and sometimes results in these conmen stealing from you when given access into your home. Never buy from someone at your door. If you want to, take their number with a view to carrying out your research first. And run this by your family or trusted friends before you actually do anything. If the person at your door is genuine, they will completely understand you taking your time in deciding to buy whatever they are offering.
Claim everything due to you
You probably spent around 40 years working and paying tax, now it’s your turn to receive. Know all of your entitlements and claim them, whether it’s in relation to social welfare rights, free schemes for the elderly or other such supports. You’ve earned the right to these supports!
Continue to invest wisely
This is one area where it’s really important to work with a financial planner. They will help you identify what your life goals are and to develop a financial plan and investment strategy to ensure your goals are achieved. Your goals might be around living life to the full for the next 10 years, maybe building a war chest for long-term care later in life or indeed your goals might relate to transferring money in a tax efficient way to your loved ones. In fact you will probably want to consider a whole host of different scenarios and potential outcomes. Your planner will help you look at all of these.
These goals need careful planning and a wise investment approach. Simply locking all of your money up in a deposit account is often the wrong strategy. Get help to identify your goals and to invest wisely.
Begin wealth transfer now
Wealth transfer is often a tricky area. Apart from the odd gift, people often don’t want to face it “until they are gone”. However on the other hand most people hate the idea that after their death, they may leave their loved ones with a significant tax bill. This may for example force the sale of the family home.
Now is the time to ensure that you leave a lasting legacy and not a tax bill. Planning your wealth transfer should be in train now. There are tax exemptions that allow you to transfer wealth to others while you are alive without incurring a tax bill. Know what is available to you and how you and your loved ones may benefit from a structured estate planning approach. Your financial planner is the person in your corner on this one.
Make sure your wishes are clear
It is your money and for you to do with it as you see fit. Make sure your wishes are crystal clear, irrespective of what the future holds for you. Should the day come where you lose your mental capacity, it is very important that you will have an Enduring Power of Attorney in place that will ensure your affairs can continue to be managed as you would wish. Of course, ensure whoever will carry out this role is very clear about what you would want.
Likewise your Will should reflect how you wish your assets to be distributed upon your death. As part of this, don’t be afraid to talk to us about death. Trust me, it’ll happen to every one of us! A recent survey in the UK of more than 2,000 people found that 30 per cent of people are uncomfortable seeking financial advice to talk about death. This undermines their financial outcomes as beneficial plans are not implemented.
Also more than half of people aged over 55 haven’t discussed bank accounts, insurance, investments and personal possessions with their family. This reticence to discuss these issues unfortunately stores up challenges for bereaved family members down the road.
At this stage in life, make sure all your financial decisions reflect what you want. A family member or trusted friends can help you with those everyday decisions. As your financial planner, we want to help you to make wise financial decisions to ensure that all of your life goals are achieved and enjoyed.