As you approach retirement, there can be a lot to think about which, for some people, can be a little overwhelming. You might be ready to put your feet up however taking action and having a plan can help make sure you are 'retirement ready'. Below, we set out five things you should incorporate into your retirement plan.
1. Retirement: have an up-to-date will
The importance of a well-drafted will cannot be understated. If you are nearing retirement, you may have a will which no longer reflects your wishes. For example, your personal circumstances may have changed or you may wish to support a charitable cause that is close to your heart. Meeting with your solicitor to ensure that your will reflects your current wishes can help you feel more relaxed as you move into the next phase of your life.
For those who have never made a will, we always recommend putting a will in place to give you control over who will benefit from your estate.
2. Retirement: grant a power of attorney
A power of attorney allows you to decide who should manage your legal and financial affairs and/or your personal welfare in the event that you lose capacity in the future. Of course, we all hope that we will be able to continue managing our own affairs, but a power of attorney allows you to nominate the people you trust to make decisions for you if you are unable to do so. The important point about powers of attorney is that you need to have capacity at the time you put the power of attorney in place. As such, it is always better to grant a power of attorney sooner rather than later.
You may also wish to put a living will (also known as an advance directive) in place. If you lost capacity, this would outline your wishes relating to the medical treatments or interventions you would or would not wish to receive in the case of extremely serious illnesses that you were not likely to recover from.
Knowing that these documents are in place and can be called upon if necessary, can help you feel retirement ready.
3. Retirement: consider your pension(s) and finances
Pensions play an important role in retirement. It is sensible to obtain advice from an independent financial adviser to help you understand your likely financial position on retirement. Additionally, it is important that you complete the relevant nomination forms relating to your pensions to indicate to your pension provider what you would like to happen to any pension death benefits when you die.
4. Retirement: review your estate plan
When considering the above points, it makes sense to think about your estate planning objectives. For example, after a discussion with your solicitor, it might be apparent that you are likely to have an inheritance tax liability on your death. If so, you may wish to take steps to mitigate this which could involve making gifts or establishing trusts.
Or, you may wish to benefit certain beneficiaries with your wealth but you are concerned that they would struggle to manage substantial funds due to their age, vulnerabilities or incapacity. Again, a trust arrangement, either in life or on death, could be a helpful solution.
5. Retirement: think about your care requirements
Clients who are approaching retirement are often concerned about the financial impact of going into care. There are various considerations which must be given to the potential care you may require in the future, but a good first step is to meet with your independent financial adviser and/or solicitor to consider those issues in depth and decide whether some form of financial planning is required.
It can often feel like there is a lot of ground to cover to become retirement ready but consulting with your professional advisers and taking early action can make the transition from employment to retirement more straightforward and will ultimately help you to feel retirement ready.