All this while preparing for getting old
While juggling with all the tax rules, advisers must keep in mind the need for an income that will meet client needs throughout retirement.
Over what will hopefully be a thirty year or longer period, pensioners will pass through three phases of life – independent, decline and dependent.
Having access to money in the first two phases can be an important way of supplementing the free healthcare available on the NHS, and tackling health issues early or in a preventative manner can be the key to extending the active years of retirement.
In the final, dependent phase, the State will pick up the costs when pretty much all other savings have been exhausted, but that may well be in a care home chosen by the local authority.
However, both those receiving care and their relatives will be much happier if they have been able to select their own care home, after due diligence, and with the knowledge that they can move if it turns out to be unsuitable.
This comes at a hefty price, and must be planned ahead for.
The costs do vary regionally, and the 2018 LaingBuisson Care of Older People UK Market Report cites a range for dementia sufferers from £692 a week in Northern Ireland up to £1,052 a week in south east England.
Too Many, Set Too Low
The reality is that the three pensions tax allowance thresholds now controlling what benefits are subject to tax when in decumulation are all set low enough to catch more and more in-retirement Baby Boomers each year.
After all, upwards of 70,000 of them are reaching their 65th birthday every year in the UK for the next 15 years and nearly 19 per cent of the total population of the UK is now over age 65.
But there are no signals from HM Treasury that this complex pensions tax web will be made easier any time soon. So, an adviser with clients aged between 50 and 75 needs to build a plan that will dance around these allowances without incurring unwelcome tax charges.
Adrian Boulding is retirement director at Dunstan Thomas
