Whilst we all accept there are lots of great aspects to retirement, many more require careful planning before you give up work and I intend to go over a few in more detail in my next few postings, writes financial blogger Ed Hill.
The first and perhaps most important action will be for your adviser to undertake a pension audit, as quickly as possible, to ensure you have enough income to enjoy the lifestyle you want in retirement.
The Government is determined to make us all take more responsibility for financial security in our retirement, with the state limiting its support and cutting final salary pensions in response to the global economy and the increased life expectancy we are all enjoying.
Perhaps before looking at financial security, we should consider the provision of care in retirement. Our longevity is a good thing, but it increases the likelihood of a growing proportion of the population requiring some degree of long-term care in their later years.
There are a lot of scare stories surrounding care provision for the elderly, with cost being the number one issue and who pays what, being the second most important question.
The Government tasked renowned economist Andrew Dilnot with assessing the cost of funding care and after a year of evidence gathering his Report was published in July of this year.
His recommendations included capping an individual’s lifetime contribution towards their social care, which is currently unlimited, with support available once the cap is reached. The Report recommended the cap be set at approximately £35,000, with food and accommodation costs left uncapped, but liability limited to £10,000 per year.
Perhaps most importantly, as we begin to look at planning for retirement, the Report recommends the means-tested threshold, above which people are liable for their full care costs should be raised to £100,000 from the current level of £23,250.
Whilst the Report’s recommendations have generally been welcomed, there are many that point out the Government will not be able to afford to implement all the recommendations. And the costs sound intimidating. At today’s prices, the cost of residential care is estimated at almost £25,000 per year, with an additional £10,000 required for nursing assistance.
Whilst medical care should be provided free of charge by the NHS, local authorities will assess the level of social care required and if your capital exceeds the current £ 23,250 threshold, including savings, overseas property, land or business assets, you will be liable for the full amount of care costs. But the important thing to remember is that you cannot be forced to sell your family home to cover the costs of care.
In my next posts I will look at some of the ways to fund the potential costs of care and how early planning can make a big difference to the result, before we move on to keeping your money away from the tax man and selling your business.
Source: http://www.expressandstar.com/business/midlands-business/2011/11/30/planning-for-your-retirement/
The first and perhaps most important action will be for your adviser to undertake a pension audit, as quickly as possible, to ensure you have enough income to enjoy the lifestyle you want in retirement.
The Government is determined to make us all take more responsibility for financial security in our retirement, with the state limiting its support and cutting final salary pensions in response to the global economy and the increased life expectancy we are all enjoying.
Perhaps before looking at financial security, we should consider the provision of care in retirement. Our longevity is a good thing, but it increases the likelihood of a growing proportion of the population requiring some degree of long-term care in their later years.
There are a lot of scare stories surrounding care provision for the elderly, with cost being the number one issue and who pays what, being the second most important question.
The Government tasked renowned economist Andrew Dilnot with assessing the cost of funding care and after a year of evidence gathering his Report was published in July of this year.
His recommendations included capping an individual’s lifetime contribution towards their social care, which is currently unlimited, with support available once the cap is reached. The Report recommended the cap be set at approximately £35,000, with food and accommodation costs left uncapped, but liability limited to £10,000 per year.
Perhaps most importantly, as we begin to look at planning for retirement, the Report recommends the means-tested threshold, above which people are liable for their full care costs should be raised to £100,000 from the current level of £23,250.
Whilst the Report’s recommendations have generally been welcomed, there are many that point out the Government will not be able to afford to implement all the recommendations. And the costs sound intimidating. At today’s prices, the cost of residential care is estimated at almost £25,000 per year, with an additional £10,000 required for nursing assistance.
Whilst medical care should be provided free of charge by the NHS, local authorities will assess the level of social care required and if your capital exceeds the current £ 23,250 threshold, including savings, overseas property, land or business assets, you will be liable for the full amount of care costs. But the important thing to remember is that you cannot be forced to sell your family home to cover the costs of care.
In my next posts I will look at some of the ways to fund the potential costs of care and how early planning can make a big difference to the result, before we move on to keeping your money away from the tax man and selling your business.
Source: http://www.expressandstar.com/business/midlands-business/2011/11/30/planning-for-your-retirement/
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