5 Retirement Risks and How to Manage Them
Many of us look forward to retirement as a time when we can finally relax and live the life we’ve been planning throughout our working years. Work stresses are finally a thing of the past, and we can choose exactly how we spend our days and who we share them with. Retirement risks are unlikely to be top of the agenda – until they impact us directly.
At Harpur Wealth Management our aim is to deliver the retirement our clients most desire, which is why we consider the biggest retirement risks as an integral part of our retirement planning process for Bedfordshire clients. There are certain global and financial factors we can’t control, but there are plenty of ways that we can help in the management of factors that could derail your post-employment life.
5 Retirement Risks We Factor In To Retirement Planning
Not all of these risks will apply to every client of course; we tailor the planning process to the specific requirements of each person we work with.
1. Financing Long-Term Care
None of us want to contemplate a future in which we’re dependent on professional care, but as we grow older the need for support becomes more of a possibility. Planning for care costs may save your children from having to make difficult decisions in the future; and it means that you can enjoy your present life without worrying about future financing concerns.
The good news is that the government is planning to introduce a cap on care fees in 2025. Even individuals with substantial assets who are self-funding their care plan will not exceed £86,000 in personal care expenses throughout their lifetime. This cap also includes domiciliary care.
2. Living Longer Than You Expected
Average life expectancy is 81.5 years in the UK, but there are plenty of people that live into their 90s and beyond. Longevity is a dual-edged sword; on the one hand, we delight in the idea of a long and happy life in retirement, on the other, we dread the idea that we’ll outlast our savings.
Planning how much you need to save for retirement gives you the opportunity to calculate the funding required for the retirement lifestyle you want to enjoy, using different life expectancy models. This allows us to help you plan for the unpredictable and mitigates the risk of running out of funds.
3. Finding Inflation Is Eating Into Your Funds
Inflation rates fluctuate and they can impact the value of your investments. It’s impossible to know how inflation will behave years from now, but there are ways to manage the risk it represents for your retirement.
To protect your retirement savings, it’s important that your investments keep up with inflation and that you optimise tax-efficiencies to take account of any future policy changes. Your Harpur Wealth advisor can assist in identifying suitable strategies to address these concerns.
4. Failure to Adapt to Change
Our great survival mechanism, as human beings, is our adaptability; once we cease to use this superpower, we’re lost. This is true throughout our lives, but especially so as we get older. Your retirement planning isn’t something that happens once and is then consigned to a drawer. It should evolve and adapt as your life progresses and changes.
At Harpur Wealth we invite clients to participate in regular review meetings. This allows them the keep us up to date with any changes in their life that may impact their retirement. We can then adapt their retirement plans to align with the new circumstances.
5. No Estate Planning
Perhaps the biggest of the retirement risks, as far as your family is concerned, is a lack of Estate Planning. It’s not easy to contemplate life continuing with you but it will, and your loved ones will thank you for having planned in advance how your estate will be managed after your death.
Estate planning provides both you and your family with peace of mind by guaranteeing that your assets go to your desired recipients while minimising inheritance tax burdens.
Working With Harpur Wealth
The earlier you start your retirement planning, the more effectively our advisors are able to mitigate retirement risks. Ideally, we will work with you throughout your life as you define and plan the retirement you desire.
Harpur Wealth Management advisors take time to develop a comprehensive understanding of our clients’ pre-retirement circumstances post-retirement and goals. Collaboratively, we create a tailored plan to fund your desired retirement lifestyle, which takes into account the relevant retirement risks that they may face.
If you feel that you would benefit from our retirement planning, why not book a free consultation today with a Harpur Wealth Advisor? Call us on 01234 924620 or use our online form.
Disclaimer
This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions.
The value of your investment can go down as well as up and you may get back less than the amount invested.
‘The Financial Conduct Authority does not regulate taxation advice’
