Why putting off financial decisions can be costly
Life gets busy. Between work, family commitments and everyday expenses, it’s easy to put important financial decisions to make before retirement to one side.
Some of these are key financial decisions to make before retirement.
Perhaps you’ve been meaning to update your will, check who would inherit your pension or arrange a Lasting Power of Attorney.
You know these things matter, but something always seems more pressing. It’s important not to delay financial decisions to make before retirement, as timing can be crucial.
The difficulty is that some financial decisions are much easier to make while everything is running smoothly. Waiting until a major life event occurs can leave you or your family with fewer options.
Here are five areas worth checking, whatever stage of life you’re at. Many of these are core financial decisions to make before retirement.
1. Is your will still up to date?
Your circumstances can change considerably over the years. You might have married, divorced, welcomed grandchildren, bought a property or experienced a bereavement.
If your will no longer reflects your wishes, your estate might not pass to the people you intended.
Without a valid will, the intestacy rules determine who inherits your estate.
This may not match your wishes, particularly if you have a blended family or want to provide for someone who isn’t a close relative.
Reviewing your will doesn’t have to be complicated. If you already have one, check whether it still reflects your circumstances and intentions.
If you don’t have one, consider arranging one as soon as possible.
2. Have you checked your pension beneficiaries?
Many people spend decades building their pension savings but give little thought to what happens to them when they die.
Depending on your pension arrangement and circumstances, benefits may be payable to a spouse, partner, children or other nominated beneficiaries.
However, the outcome depends on the scheme rules and the type of pension you hold.
Check your expression of wish or beneficiary nomination forms. Make sure they reflect your current wishes, especially after marriage, divorce, bereavement or the arrival of children or grandchildren.
It’s also important to understand how your pension fits into your wider estate planning. The tax treatment of inherited pension benefits can be complex and is subject to changing legislation.
A quick review now could help prevent confusion for your family later.
3. Have you arranged a Lasting Power of Attorney?
Many people assume their spouse or adult children could automatically manage their finances if they became unable to do so themselves.
Unfortunately, that isn’t necessarily the case.
A Health and Welfare Lasting Power of Attorney covers certain decisions about your care and welfare.
These arrangements must be made while you have the required mental capacity to do so. Leaving it until you need someone to act for you may mean it’s too late.
Without an appropriate arrangement, family members might need to apply to the Court of Protection to obtain authority to manage certain affairs. This can involve additional time, expense and stress.
Putting an LPA in place is about maintaining control over who can help you if circumstances change. In short, it’s one of the financial decisions to make before retirement that can secure your future well-being.
Read more on why millions are at risk for not having a Power of Attorney
4. Do your savings and investments still suit your needs?
Financial plans should evolve as your life changes.
Money you were happy to invest for the long term ten years ago might now be needed for retirement, home improvements or helping family members.
Likewise, holding substantial sums in cash might feel reassuring, but inflation can gradually reduce what that money buys.
Consider whether your savings remain accessible enough, whether your investments reflect your attitude to risk and whether your money is still working towards your current goals.
You don’t necessarily need to make changes. Sometimes, reviewing your arrangements and confirming they’re still appropriate is valuable in itself.
5. Would your family know what to do if something happened to you?
Important information is often scattered across paperwork, emails, online accounts and filing cabinets.
Would someone you trust know where to find your will, pension details, insurance policies and essential financial documents?
You don’t need to share every private detail. However, keeping important information organised and making sure the right people know where to find it can make a difficult time easier for your family.
Remember to protect sensitive information and use secure methods to store passwords and account details.
Furthermore, financial decisions to make before retirement often come down to organisation as well as planning.
A little preparation can make a big difference
These decisions might not feel urgent today, but addressing them can reassure you and your family.
You don’t have to tackle everything at once. Start with one task, note what needs attention, and work through the list at a manageable pace.
At Spectrum Independent Financial Services, we believe good financial planning is about more than investments and pensions. It’s also about helping you understand how the different parts of your financial life fit together.
If your circumstances have changed or you haven’t reviewed your arrangements for some time, it may be worth having a conversation with your financial adviser.
Sometimes, the most valuable financial decision is simply making time to deal with something you’ve been putting off.
Need help getting your finances in order?
At Spectrum Independent Financial Services, we can help you review your financial plans and identify any areas that may need attention. Get in touch to arrange an initial meeting at our Liverpool office, without obligation and at our expense.
This article is for information purposes only and does not constitute financial advice. Tax treatment depends on individual circumstances and may change in future. Investments can fall as well as rise in value, and you may get back less than you invest