Author: Dave Worrall
Chartered Financial Planner
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Published: January 2025
As individuals approach their 70s and 80s, their financial priorities often shift. With retirement in full swing and the possibility of transitioning into later stages of life, managing finances becomes even more crucial, ensuring stability, safeguarding assets, and planning for an unpredictable future.
Retirement Income Management: Planning for Longevity
At this stage, individuals are likely living off their retirement savings, pensions, or other income streams. A critical concern is ensuring that income continues to meet their needs, particularly since many people are living longer and need to plan for 20 or more years in retirement.
Key considerations:
- Withdrawal Strategies: Carefully plan how to withdraw from retirement savings – reviewing how the portfolio is structured and looking at the most tax efficient ways of receiving an income. The recent changes in the Budget (see below) to pensions are an example of why these should be regularly reviewed.
- Diversification of Income Sources: Combining State Pension benefits, annuities, pensions and investment income.
- Tax Planning: Taxes on retirement income can be substantial. Working with a Financial Planner can help structure withdrawals in the most tax-efficient way, reducing the potential impact of taxes on retirement funds.
One of the areas to consider pre age-75 is how or when to access your pension. Currently, if you die pre-75, your personal pension will pass to your nominated beneficiaries free from Inheritance Tax and potentially entirely free from income tax in the nominated beneficiaries’ hands – please ensure you review your own pension as for some types of pensions this may not be the case. However, if you die post 75, the pension would be liable to income tax for the beneficiary, meaning a potential loss of available tax-free lump sum.
There are also the recent changes announced by Rachel Reeves in the Budget last October where your pension may be included within your estate for Inheritance Tax from 6 April 2027. This is a real change for how assets can be passed on to the next generation.
Estate Planning: Ensuring a Smooth Transition
Estate planning is not just for the ultra-wealthy; it’s crucial for anyone who wants to ensure their assets are distributed according to their wishes and that their loved ones aren’t burdened with the complexities of probate.
Key considerations:
- Wills and Trusts: Creating a Will is fundamental. Establishing a trust can also ensure that assets are managed on behalf of a beneficiary if they are not capable of managing them themselves.
- Power of Attorney: Appointing a power of attorney (POA) for both financial and healthcare decisions ensures that someone you trust can make decisions if you are unable to do so.
- Beneficiary Designations: Regularly review beneficiary designations on accounts like life insurance and retirement plans. These should be updated to reflect any changes in family dynamics.
Financial Scams and Fraud Prevention: Safeguarding Assets
Unfortunately, individuals in this age bracket are often targeted by fraudsters looking to exploit vulnerability. Financial scams targeting the elderly are on the rise, from phishing emails to fraudulent investment schemes. Staying vigilant and informed is crucial and something family can help with.
Conclusion: Financial Planning for Peace of Mind
Financial services for individuals between 70 and 80 are about more than managing money – they are about securing a future that is stable, comfortable, and as stress-free as possible. Working with experienced financial professionals can provide an additional layer of assurance, allowing you to focus on enjoying your later years without the financial worries that can otherwise cast a shadow on retirement. Remember, it’s never too late to refine your financial plan. Start taking action today to safeguard your future.
If you would like to talk to one of our Chartered Financial Planners, please contact us on 01223 233331 or email info@mmwealth.co.uk.
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Disclaimer
Opinions constitute our judgment as of this date and are subject to change without warning. The value of investments and the income from them can go down as well as up, and you may not recover the amount of your original investment.
The information in this article is not intended as an offer or solicitation to buy or sell securities or any other investment, nor does it constitute a personal recommendation.
The Financial Conduct Authority does not regulate estate planning and tax planning.
The information contained within this blog is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.
