We are all living longer on average. Being active in our eighties is no longer a rarity, and many make it into their tenth decade still enjoying reasonable health.
Of course, not all of us will be fit enough to enjoy complete independence as we get older. This may mean that some home care assistance, or new residential accommodation will need to be provided.
We may have to provide for a longer period of retirement, and for care – for ourselves and for our partners.
So, although we will probably be done with contributing to a pension and living on the wealth we have amassed in our pension pots, we may still need to manage our investments to provide the funds we require in later life.
Your investment priorities
Your main objective may be to protect your wealth and capital alongside managing your cash flow. You cannot afford to run out of money in retirement, and you may need to be prepared to have to pay for the quality of care you want.
Your investment goals will probably focus on income and security. Bond based investment, using a mix of different maturities and yields to balance income with risk can provide income, but as the years go by you may feel less ready to be burdened with investment decisions.
Fortunately, at Continuum we can help you identify suitable managed funds aimed at providing the kind of secure income you are looking for, and remember, you can still use your £20,000 ISA entitlement to add to your portfolio each year.
You have passed the stage where risk-taking is required, and maintaining wealth is now the focus. However, part of your diversified portfolio could still be in stocks that carry some risk. This will help you leave money for a spouse or children or grandchildren whose investment horizons are still long. You might also want to look at investing for long-term health care.
Invest in health
If you are worried about paying for care, for yourself or your partner, it may be possible to buy long-term care plans. These fall into categories of Immediate Funding and Deferred Funding, depending on when you need the money.
The company that provides the plan will pay to help fund your care fees for as long as you stay alive. The longer this is likely to be, the more expensive the care plan will be.
There are other ways to provide for care home costs, and at Continuum we will be pleased to discuss them with you.
Of course you cannot take it with you
We all hope for a long and happy life, but we all know that the time will come when we will be calling on our investment portfolio no more. If we have loved ones who depend on us, or simply those we want to help, we need to look at succession as part of investment planning.
The problem is inheritance tax. At 40% of everything we leave above £325,000 (excluding an allowance for the family home) it means a substantial reduction in what your beneficiaries receive.
Most of us would prefer to leave our wealth to our loved ones rather than the taxman. Intergenerational planning has become an important part of financial management. It means that more of the wealth we worked for will go to those we care about.
Your Will is your first, and most important tool for intergenerational planning. Your solicitor will draw it up according to your wishes, but it is essential to get professional advice from experts who understand the complex rules of IHT. At Continuum, we can provide help with solutions such as trusts as part of your investment planning,
Trusts can continue for many years, and if you have enough wealth, they can go on providing financial support for several generations, providing income while leaving the capital untouched.
What should you do?
The Continuum infographic on the different ages of investment is here and shows how your investment needs and solutions change through life. We look at each stage in more detail in this series of articles, whatever your age, and whatever your plans for the future we can help find the financial solutions you need.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Protection products or investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
The Financial Conduct Authority does not regulate Taxation & trust advice and will writing.