Don’t Overlook the Importance of Your Client’s Residence When It Comes to Building Your Retirement Planning Journey

Many firms are designing their retirement planning journey, most of which will be an adaptation of their existing planning process. And for many firms with an established client bank, little will need to change when it comes to undertaking reviews.

It’s likely that this will revolve around reviewing a client’s current finances, checking that nothing has changed, and reviewing their goals, making sure that any strategies have been or will be achieved. It will probably also involve ensuring any lifestyle documents are in place, like a will or Lasting Power of Attorney.

At this stage, the focus will probably turn to exploring tax-efficient withdrawal strategies. But what is that plan based on? In all likelihood, it’s the standard journey:

• A client retires now and spends a couple of years with higher expenses as they undertake holidays they had always wanted to go on, or engage in hobbies they missed
• Next, expenses, holidays, and hobbies will likely reduce as the inevitable slowdown rolls in
• Finally, there’s the modelling of the client’s life expectancy out to 100 with five years in a care home.

But here’s the key – more and more people are breaking the mould of this stereotypical retirement journey.

And whether they need liquid assets, hence requiring taking equity out of their property, or have more than enough, their living situation and residence can play a big part in planning.

Do you challenge or educate clients on their understanding of the differences, and reality, of staying in their current home, versus traditional retirement housing, care homes, or Independent Retirement Communities (IRCs)?

Some IRCs provide tax benefits, with up to 35% of the property’s value excluded from the estate for Inheritance Tax purposes.

We know care homes can be astronomically expensive, but some IRCs provide similar or better care services at half the price of a traditional care home. Do you know which?
Then, there’s the softer side of increased wellbeing provided through IRCs that can reduce the likelihood of ever having to move to a care home or traditional retirement housing situation.

Being better educated on later-living options and their implications can have a significant financial impact, and that’s exactly why they should form part of a retirement plan. Plus, with IRCs being a growing sector, more people are moving to them earlier, much earlier.

With the FCA’s current review of retirement planning underway and consumer outcomes being top of the agenda, can you afford not to build retirement living into your retirement journey?

To find out more see: https://www.riverstoneliving.com/advisors