How do you know you are covering ‘all the bases’ when advising clients that are 50 and over?
Here are the different areas to consider and the contributing factors.
Before we start, it is worth looking back to how family finances have changed in the past 30 to 40 years.
The 20 to 30-year-olds of yesterday – the 50 to 60-year-olds of today – are likely to have had very different expectations of what their life was going to be like when they started planning for the future, compared to today.
The traditional nuclear family, with Mum and Dad and 2.4 children, has long passed. But it is worth remembering how this has evolved.
Thirty to 40 years ago, financial priorities might have looked something like:
- University being funded primarily by grants, so university funding was not a primary consideration.
- Parents being concerned with helping their children save for a small deposit for their first homes.
- An expectation that the mortgage would be paid off well before they expected to retire, perhaps with a mortgage endowment policy.
- Relatively high interest rates, compared to the previous 10 years, making saving more attractive but borrowing more expensive.
- Many workers expecting an employer final salary pension scheme, with planned retirement ages of 60 for Mum and 65 for Dad.
- Financial advice focusing on Dad, usually the main breadwinner, who typically had a higher risk appetite than Mum.
- For many, at retirement, having a lump sum to invest perhaps for the first time. So financial knowledge and confidence, when it came to more sophisticated financial planning and investment options, was low.
So much has changed in the past 25 years.
