You and your family

Whether you want to build and protect your wealth to give you and your family a secure financial future, or enjoy what you have now, one thing is sure: the financial decisions you take from the moment you start earning right through to retirement and later life will shape your ability to achieve your goals.

We know it’s a cliché but life is a journey. When you are starting earning you may well have little idea about what you will want from life in, say, ten or 20 years’ time and where you will end up. We help you work out what your shorter term priorities are and suggest realistic ways of organising your money to help you achieve them. Rather than being restricting, having a financial plan should give you the freedom to enjoy your life, now and in the future, with your ultimate goal being financial independence. As you make your way through life and your priorities and goals evolve, we will work with you to adapt your plan accordingly.

Below are some of the more common scenarios and issues we help people with during the various stages of their life.

Getting the basics in place

When you are starting out on your chosen career, moving into your own place, and enjoying your independence, the whole of your adult life lies ahead of you, thoughts of financial planning are probably far from your mind. Yet by taking a few simple steps now, you can put in place the solid foundations which should make things easier financially as you progress through life.

Here are some of the things you may need to think about as you get started in your chosen career:

• Where to invest regular savings.
• How would your income be affected if you were off work for a long time due to a serious illness or accident?
• Should you stay in your employer’s pension scheme?
• Could you pay more into your employer’s pension scheme?
• Deciding what to do with your bonus.
• Are your parents or grandparents offering financial help? If so, make sure it is tax-efficient for them and for you.
• Moving job? What happens to your previous pensions?
• Could you pay less income tax?
• Do you have a Will? And a Lasting Power of Attorney? Having these gives you peace of mind that you have made arrangements should the worst happen.

A young and growing family

Starting a family changes your life, bringing joy and new responsibilities. Things are likely to be hectic, especially if you are juggling work and family life.

You will probably need to make a few adjustments to your finances so you can enjoy the precious years when your children are young and give them the best start in life.

Here are some of the things you may need to thing about when your children are young:

• How would your family cope financially if you or your partner were to be made redundant, fall seriously ill, have an accident or worse?
• Have you updated your Will, pension arrangements and investments?
• Has the household’s income and expenditure changed? If so, how can you counter the knock-on effects?
• The financial implications of taking a career break.
• Spare cash? Should you pay more into pensions or ISAs? Or make a mortgage repayment?
• Ways of saving for school fees and helping your children through university.
• Are your parents or grandparents offering to help financially? If so, make sure it is tax-efficient for them and for you.
• Who would look after you and your family if you were to have a serious illness? A Lasting Power of Attorney setting out your wishes can set you mind at ease.

Becoming self-employed

Whether you are setting up your own business or becoming a consultant or contractor, becoming self-employed has important implications for your personal finances. You lose the various financial safety nets and benefits that come with being employed. You now need to take total control of your finances in order to achieve your personal and business financial goals.

Here are some of the things you should do when you become self-employed:

• Pay national insurance in order to get the maximum state pension.
• Pay regularly into a suitable personal pension scheme.
• Build an easy access emergency fund – your income may vary and you may have unexpected bills to pay.
• If you have pension savings from previous employers, work out if it makes sense to consolidate them.
• Take our insurance so you have income should you fall seriously ill or have an accident.
• Make sure you do not pay more income tax than is strictly necessary.
• Take out life insurance – especially important if you have children or other dependants.
• When putting money into or taking it out of your business, make sure you do it tax-efficiently.
• You should review your Will and Lasting Power of Attorney as your circumstances are likely to have changed.

When your life changes unexpectedly

Most people experience a mix of good and bad times. A promotion or new job, bereavement, illness, accident, divorce, business problems – whatever life throws at you and your family generally has an impact on your finances. So when something significant happens, whether good or bad – we help you adjust your financial plan accordingly.

Here are some of the financial decisions you may face when your life changes unexpectedly:

• Death of a spouse or parent: are their dependants financially secure and is money invested appropriately and tax-efficiently?
• Promotion or changing jobs: have your pension contributions, income protection insurance, death-in-service and other employee benefits changed? Are they still adequate?
• Moving abroad: what will happen to your UK pension? Do you need to change your inheritance tax plans? Where should your investments be domiciled?
• Divorce: should you sell the family home or buy out your partner and take out a new mortgage? Should you split your respective pensions? What will happen to investments, including separating any joint ones? How can you protect your new lifestyle and that of your children?
• Redundancy: what should you do with any lump sum you receive? What happens to your pension? Can you continue paying in to it? Is your family still protected should you fall seriously ill, or worse?
• Relative going into care: Are they claiming all the benefits to which they are entitled? Is there a funding shortfall? Can investments be used to generate additional income? What are the options for the family home?
• When your life changes, you should check that your Will and Lasting Power of Attorney still reflect your wishes and circumstances.

Approaching retirement

Financially, things should be a bit easier now. Your children are probably independent and you may already have paid off your mortgage. Perhaps you are looking forward to taking it a bit easier, having more time to do the things you enjoy, or maybe you want to work part-time. You may find yourself faced with the dilemma of caring for elderly parents or relatives.

Regarding the wealth you have accumulated, your main priority is likely to be to preserve the value of your pension fund, investments and any money you have inherited, so you have enough to maintain your lifestyle when you retire.

Here are some of the financial decisions you may face as in the run-up to retirement:

• Can you afford to retire early?
• If you are already financially independent, what should you do with excess income?
• Should you access your pension when you turn 55, for instance to pay off your mortgage? What would the financial consequences be?
• Are you thinking of selling your business? If so, what is the most efficient way of doing this?
• Are there tax-efficient way of helping your children financially?
• Should you take a more cautious approach with your investments?
• Are you thinking of working part-time? If so, what are your options for supplementing your income?
• Do you have various pension pots from previous employers? If so, what should you do with them?
• Maybe you have inherited some money. If so, how can you put it to good use?
• How and when to start drawing your pension and be confident you will have enough money for the rest of your life.
• Is there a shortfall? If so, how can you fund the gap?
• If you have other investments and savings, eg ISAs, can you generate additional income? And what are the tax implications of using them rather than your pension fund for your retirement income?
• Maybe you are thinking of buying a property and need to understand your mortgage options.
• If your parents need to move into a care home, how can they pay the fees without necessarily running out of money?

Later in life

At last your time is your own to do all those things you always wanted to do but never quite got round to – travel, learn a new skill (or relearn an old one), help others and indulge yourself. Also, while you may want to pass on as much of your wealth as possible, you realise that your wealth could be seriously depleted by care home fees.

Here are some of the things you may need to think about when you have retired:

• How to structure your assets so as to maintain your lifestyle for the rest of your life, including being able to pay any unexpected large bills.
• Making sure that your investments are generating the income you need, if possible while maintaining their value.
• Thinking of down-sizing? What should you do with the cash you generate?
• Are you among the increasing number of people who will leave their families with an inheritance tax bill to pay? Do you understand how it is likely to reduce the amount you end up passing on? Did you know that by using legitimate planning strategies it is possible to reduce or even eliminate a likely inheritance tax bill without necessarily reducing your income.
• Do your Will and Lasting Power of Attorney (and those of your partner) need updating, for instance because your and your family’s circumstances have changed, for instance you now have grandchildren?

For a more detailed discussion please call 020 7702 4488 or email enquiries@mkcwealth.co.uk