Why lockdown could be your life without the right financial planning

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Life as we know it has changed dramatically in the last few weeks. We’ve spent much more time at home than we probably ever have before. We’ve taken on new roles, from chefs to schoolteachers. And, we have adapted to new ways of working remotely and keeping in touch with friends and family.

As the first tentative steps are taken towards easing lockdown and returning to normality, it’s worth reflecting on this fact. Being stuck at home as we have, and not being able to go out and do the things that we would normally do, could be everyone’s new reality without the right financial planning.

Lockdown could be like a life without protection…

In recent weeks, we have sampled what life is like when we’re unable to live it as normal. So, it has become much easier to envisage what you, your partner, and your family’s life would look like if long-term disability, a serious illness, or the death of a loved one brought everything crashing down.

What would your family do if you were unable to work after an accident? Or if you became seriously ill? Or, if the very worst should happen, and you pass away?

Protection is designed to provide a capital injection when you need it the most. This could be in the form of:

  • A monthly income to enable you to maintain your important financial commitments if you were unable to work for an extended period
  • A tax-free lump sum if you were diagnosed with a serious illness. You could take the time off work safe in the knowledge that you had a financial cushion to replace income, repay debts or pay for medical care
  • A lump sum for your partner, family or dependents to repay your mortgage and remain in the family home if the very worst happens.

Now is a great time to review your protection and to ensure you have the right cover in place. Speak to us to find out more.

Will your retirement provision mean a lengthy later-life lockdown?

Now we’ve lived through lockdown, it’s easy to see what restrictions there would be on your lifestyle when you are older if you don’t make sufficient provision for your retirement.

In 2019, consumer group Which? surveyed thousands of their retired members to see where their money is being spent. They found that, on average, households spent a shade under £2,220 a month, or around £27,000 a year.

This covers all the basic areas of expenditure (which had a combined cost of £17,800 per year on average) and some luxuries, such as European holidays, hobbies and eating out.

The study also found that you would need £42,000 a year if you include luxuries such as long-haul trips and a new car every five years.

The same study revealed that your pension pot would have to be worth:

  • £298,000 to get £27,000 a year from an annuity
  • £215,450 to get £27,000 a year from income drawdown
  • £695,000 to get £42,000 a year from an annuity
  • £502,775 to get £42,000 a year from income drawdown

Note: these figures also factor in the State Pension

If you want to maintain your lifestyle in retirement, it’s important to think carefully about whether you’re making adequate pension provision. If you don’t, your later years could see you reminiscing about the old times as you unwittingly recreate your lockdown experience.

Get in touch

If it’s time to review your protection arrangements, or you want to book a review of your retirement planning, please get in touch. Email enquiries@blackswanfp.co.uk or call 020 3828 8100.

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Black Swan Financial Planning and Andrew in particular, are very clever at working out how risk averse we are, and coming up with solutions that we feel comfortable with. We are happy in the knowledge that we can continue to enjoy a comfortable retirement. Andrew Peters is a very, very friendly person who is great to chat to and easy to deal with. He explains things very clearly in layman’s terms, and if we still don’t understand, he explains it until we do!

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Rob [Young] is extremely knowledgeable. I knew nothing about the different types of trusts which will not only secure my income in retirement, but also leave a legacy for my children. I’m glad that I sought his advice when I did.

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