You, or someone important to you is:

65+ years of age


Only now will you know whether you wish to give up work completely, cut down gradually to phase in life outside work or alternatively change your career altogether to do something you have always wanted and is now affordable as an option because you are retiring.


For many years you will have been investing your capital to produce growth in readiness for life after work, and this strategy needs to be reviewed. It may be that you do not need to take the maximum income possible from your portfolio because you are continuing to receive a salary from one source or another - or your pensions are initially sufficient for your needs, but it is useful to establish just how much extra income you could take.

Whilst there is an obvious temptation to take income from tax-sheltered investments like ISAs because there is no tax to pay on the money you receive and it need not be shown on any tax returns, you should not ignore the annual Capital Gains Tax allowances. Profits of at least £11,300 per person can currently be taken without any tax liabilities in each tax year and so there can be a continuing benefit to be derived from investing for growth rather than just for income.

Contrary to popular belief, a mixture of both styles of investment is an excellent idea because global investment markets do not produce strong returns in all sectors every year. This means that in years when capital growth is good you could supplement your income by realising some of those gains but in other years when investments fall in value or do not rise sufficiently well the income stream delivered by other investments can be taken instead.

Certainly this approach has stood Dennis and Mary in excellent stead during the first 18 years of their retirement. They have enjoyed a rising stream of income each year and there is substantially more capital now than there was when they first retired despite their best efforts to spend it.

.......................................................................................................................................

Family liaison can be beneficial in unexpected ways. Peter and Julie had been able to help their own children at key stages in their life but now found that 16 years after giving up work their savings and investments were running low. Neither of them wanted to move from their home and they had been considering an 'equity release' scheme to take some cash out of the value of the house.

Their home was worth a considerable amount of money and, despite the careful use of all tax allowances available though their Wills, the combined estate of Peter and Julie was at a point where Inheritance Tax would soon become payable. Corrigans suggested that they should sell part of their home to their children at a fair market price. This represented an excellent investment for the children, a risk-free solution for Julie and Peter and it also had the happy effect of staving off the threat of Inheritance Tax for another day.

Their children were not all able to take part in this scheme but all of them were happy to be able to help their parents and so two of the three children bought a stake in their parents' home.

Peter and Julie decided to invest the cash they got from the children into an offshore Capital Investment Bond using similar collective investments to the ones they have in the rest of their portfolio and pensions. Because this investment was made for tax planning and investment purposes alone, with no immediate prospect or thought about needing care from the Local Authority, the value of that Bond will not be regarded as an asset for means testing if care is eventually needed. 

.......................................................................................................................................

No matter which route you are inclined to take there are some important points to bear in mind.

The first is that the wealth you have built up belongs to you and not to your children so start to spend it. You will probably find that you need to spend more money than you did in the past, but this is no cause for concern. As the years go by your appetite for travel and adventure will diminish and so will your ability to spend your wealth - so enjoy your money whilst you can. In the latter stages of life you may find that you need to buy support for daily life and at that point your expenditure will rise steeply, but this ebb and flow can be anticipated and so you can plan for it.

It is also important to talk. Keep in touch with Corrigans to double check your own thoughts or for fresh ideas and let your family know what you have planned to do. You will have reviewed your Will on a number of occasions, but it is vital that the wider family know where the Will can be found and what your immediate wishes would be.

Make sure you have granted a Lasting Power of Attorney to one or more suitable persons so that they can act in your best interest if you suddenly become unable to exercise those decisions yourself. Whilst you will be familiar with the investments that you have built into your portfolio and any trusts that you may have created your family also need to know the broad principles too. This is also true of the people holding your Power of Attorney because you would want them to continue acting in the manner you would have wished yourself.

.......................................................................................................................................


Back to the main LifestageTracker page