Planning for a long life

• When should your retirement date be? The government has already legislated to increase the State Pension Age in stages to 68, with the first increase starting in 2024. Retiring later or phasing your retirement is one way to increase your pension.
• Will you have enough income as you approach your nineties? If you choose to buy a level annuity – as most people with a personal pension do – the amount you receive will stay the same no matter how long you live. That starts to matter as inflation takes its toll. If inflation averages 2.5% a year for 20 years, the buying power of £1 will fall to around only 60p. But if inflation matches the experience of the last 20 years (to March 2008), then buying power would drop to barely 49p.
  
• What plans have you made to cover the potentially huge costs of care? A longer life is not necessarily a longer healthy life. Long term care expenditure usually comes late in life – just when inflation has cut the value of that fixed pension.
  
• Does your inheritance tax planning need to be reviewed? On the one hand, your children would probably prefer not to wait until they had retired to receive their inheritance, but on the other, you might need to hang on to your capital.

Addressing these questions is not easy, but that does not mean they should be ignored. The sooner you start the planning process, the better. Do nothing and you could spend a very long time regretting it. The Financial Services Authority does not regulate tax advice.

For advice from qualified financial advisers contact Daly Harvey Morfitt on 01789 299655.

1. www.lifetrust.com

Notes on using this fact sheet:
This fact sheet is published solely to provide information and it does not constitute advice or a personal recommendation. Always take detailed financial advice from a suitably qualified individual before making important financial decisions.