Succession Planning

Things to do before you’re 50

Still feeling young but starting to creak? Grey hairs starting to appear?

Both professionally and financially, the period between our 40th and 50th birthdays is usually a very busy and important decade. So many deci­sions are made that affect the life we will lead in our later years. As we make our way through this period, it’s important to check whether you have a strong financial foundation in place and are ready to move confidently into the remaining chapters of your life. Below are a few points you should consider as you plan for your future.

The majority of people in their forties will have dependants, whether children, spouses or partners, or increasingly elderly parents. From our experience, many of these people simply do not have enough life cover to ensure their depend­ants can maintain their lifestyles if they were to die prematurely. It has been a long-standing practice in financial services to ask prospective clients to imagine they were dead and to think about the lifestyle their beneficiaries would lead over 24 hours. The most common reaction is for the colour to drain from their faces. The first step in any financial plan is to ensure that you have enough life and critical illness cover to provide security should the unthinkable occur.

With life expectancy increasing and pension and social security systems as we know them breaking down, failing to plan for your autumn years could leave you in penury or dependent on the state, family or friends. At what age do you want to stop work? What lifestyle would you like to enjoy? How will you build the income you require to replace your existing arrangements?

If you’re 40 now and want to retire at 60 that’s 240 paychecks until retirement. Given that life ex­pectancy is, on average, 85, you will have 240 pay days left to plan for 300 months where you will not have a salary and have to live off your savings. You need to plan and you need to start now.

Where do you invest? Is it tax efficient? Do you benefit from tax deferral? Very often the headlines focus on the fees of funds we have invested in, While this is an important issue, an even larger issue is the detrimental effect the taxation of savings has on your investments. So be smart and structure your wealth and financial planning in the most efficient way. Tax avoidance is illegal, tax deferral is not.

As the saying goes, ‘All work and no play make Jack a dull boy’. None of us will live forever, and if you haven’t done so already, start writing things down that you want to do with your life. Call it your bucket list. If you had 12 months to live, what would you do? Where would you go? Who would you go with? Family and work commitments may make some things impractical. However, start planning what it is you would like to do most, and then plan to go do it! Don’t be the person who could have, would have, should have, but didn’t. To conclude, it’s vitally important we form a robust foundation for the future and that of our loved ones. This will include adequate insurance and retirement provision, as well as planning for the years after retirement where some form of additional care may be needed. The Cheshire Cat in Alice in Wonderland asked Alice “Where are you going?” Her response was, “I don’t know:’ We can’t let our lives be the same. We must plot a way to the life we want to lead in what is arguably the most productive decade of our lives. If you don’t know where to start, then speak to a professional financial advisor immediately.

Written by Trevor Webster
Managing Partner Taylor Brunswick Japan
Original artical from EuroBiz Japan Print Edition April 2017

Private Wealth Management Hong Kong

Taylor Brunswick Japan K.K
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