How to help clients facing later life planning challenges

This article explores three of the greatest challenges later life planners currently have to consider and prepare for, tax changes, market volatility and the cost of care, and shows how a comprehensive later life plan, delivering more than just estate planning for inheritance, is increasingly important.

The threat of tax rises

In 2019, the new Conservative Government, facing the challenge of delivering an orderly Brexit, but not yet dealing with the impact of a global pandemic, promised there would be no changes to income tax, national insurance or VAT.

Eighteen months on, they find themselves in an unprecedented economic scenario, with a deficit of £394bn (19 per cent of GDP), its highest level since 1945.

While commentators remain focused on the ongoing pandemic and its impact on both lives and livelihoods and when it might come to an end, they also have one eye on the issue of paying for the extreme lengths the Treasury has gone to, to keep the country financially afloat.

Likewise, investors are equally mindful of this issue. If the government needs to balance the books through fiscal policy, how will any decision made now fare in a post-pandemic financial future?

For advisers, there are two clear ways to approach this planning dilemma.

Firstly, one could attempt to foresee the future and plan for the measures that might be implemented in the coming months and years. The problem with this approach is that one would need a crystal ball.

Secondly, one could accept that there is no way to predict the measures that will come into effect and wait until there is some form of clarity.

But herein lies the problem of delay in the face of continued uncertainty.

For almost a year now, many have held off on vital long-term plans due to the fear of the unknown, yet they need to accept that another year or more of inaction due to the potential of further uncertainty comes with its own real risk.

If the government needs to balance the books through fiscal policy, how will any decision made now fare in a post-pandemic financial future?

And the longer it goes on, the more risk they are taking.

The simple answer to this conundrum is to embrace a strategy which remains flexible to any possible changes, but in the meantime delivers on the key outcomes the client requires.