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Good luck, Joe!

Joseph R Biden Jnr is now the President-Elect of the USA.  By the time of his inauguration he will, aged 78, be America’s oldest president.  Together with Speaker of the House of Representatives, Nancy Pelosi, aged 80 and Mitch McConnell probable Senate Majority Leader also aged 78 , they will form a trio of VERY experienced political leaders.

Vice President-Elect, Kamala Harris aged 56 is literally of a different generation.

So has 80 become the new 60?

Step back in time?

I’ve been speaking with a number of clients about this very point over recent months.  As Covid restrictions and lockdowns have been implemented, people have had time on their hands. A number of them have taken the opportunity to reflect on their futures and put their houses in order to prepare for the next stage in their life.

And how views of retirement have changed over the years!  I can remember in the late 80s having a meeting with a financial adviser and going through a “fact-find”; a questionnaire designed to ascertain where your finances are now and how you would like them to develop in the short, medium and long-term.  Then, I wanted to retire “early”, aged 55, financially secure with probably 20 years of happy, relaxing, retirement ahead of me (guess what, still working at 57!)

I should be so lucky

Now, many clients see themselves retiring later and having a much more active retirement, with possible voluntary work, travel, sport and many other activities filling their time. And why not?  Age expectancy has grown by 7 years since the time of that fact find. I suspect that, as working patterns have changed over time, those in their 60s and 70s probably don’t “feel” as old as their parents did at the same age.

Of course, that active retirement will not come cheap. I have been working with those clients to give them an insight into the funds they will need to enjoy that part in their life.  Just like my financial adviser friend back in the 80s, that assessment starts with an understanding of the current position, looking both at income and capital.

We then look at current spending and understand how that might change.  Certain areas of spending will increase.  More time to spend means more time to spend!  But others will contract and change.  There are some excellent studies published by the Office for National Statistics monitoring the changes in spending patterns over time and we can use this as a basis for projection.

Next we identify likely change in assets, maybe gifts to children, downsizing properties or buying holiday homes.

Inevitably, tax plays a part in all of this.  Across all of the taxes on which I advise, Inheritance Tax provides the greatest range of opinions.  Some don’t care, saying the tax is only payable when I’m dead so why should I bother.  Others take the opposite view and will do anything to prevent further tax being extracted from their family at any time.  Of course, there are many other views between those extremes.

Finally we look at the “what-ifs”.  What if someone needs long-term care?  If investment returns fall?  Or if tax rates change?

Confide in me

Pulling that all together gives the client a panoramic view of whether their wishes for their retirement are achievable and the foundations for a plan of action.

Something that the current President may need right now!