Five times financial advice could really help
The five times in life you should seriously consider taking financial advice.
Even if you’re usually comfortable managing your own finances, there are life-changing moments when getting expert advice could make a world of difference.
Here are five times you should seriously consider taking financial advice.
Keep in mind that the article itself is not advice and you should consider advice if you’re ever unsure what course of action is right for you.
1. Advice for retirement
Retirement represents a crucial turning point. The decisions you make at retirement, like how and when you access your pension, could impact the income you receive for the rest of your life. You can usually access your pension from age 55, rising to 57 in 2028.
Your retirement is unique to you. And it’s something you’ll generally only do once. So even if you’re financially savvy, you may still need help to deal with something as complicated as accessing your pension.
To start your retirement with confidence, why not get an expert involved?
An adviser can help you understand all your options and check that what you plan to do is right for your circumstances. They can also help make sure that your pension is on track to pay you the money you need, when you need it. If it’s not, they can help you work out ways to make up the shortfall.
You should always seek advice if you’re not sure what course of action is best for you. You can also get free impartial guidance from Pension Wise from age 50.
2. Advice for inheriting a lump sum
Deciding what to do with a lump sum can be daunting.
Ultimately, it depends on your long-term goals. But one thing’s for sure, you want your money to work hard for you and be as tax efficient as possible.
Investing is one way you could make your money go further. Even if you’re used to choosing your own investments, you might want to consider taking advice with a larger lump sum. Things can get trickier when more money is involved.
An adviser can build a well-balanced investment portfolio that suits your situation and goals. They’ll consider whether you want an income from your investments, to leave it to grow in the long-term, or a bit of both.
Remember - investments go down as well as up in value, and so you might get back less than you put in.
An adviser can also make sure you’re making the most of your tax allowances and reliefs. After all, less tax means there’s more money left for you. Tax rules change and benefits will depend upon your circumstances. But an adviser will stay on top of changing regulations and can apply the rules to your individual situation.
3. Estate planning advice
The last thing you want is for your loved ones to struggle to unravel your finances and wishes when you pass away. Talking to an adviser now could make things easier for you, and for them.
By taking financial advice alongside legal advice, you can make sure that your finances line up with any legal arrangements and what you have set out in your Will.
An adviser can also help with inheritance tax (IHT). Generally you pay IHT on assets passed down the generations. It’s currently 40% on the value of a person's estate above £325,000, or £650,000 for a couple. This includes property, money, investments and other possessions. There is also an additional allowance of up to £175,000 (up to £350,000 for a couple) if you pass on your family home to direct descendants.
Our online inheritance tax calculator can help you work out if you might be affected.
The good news is that there are ways to reduce IHT. Advice helps you navigate the rules safely and correctly. And you could leave more behind for the ones you love.
4. You’re over the age of 50 and your pension is near (or over) £1m
The £1,073,100 lifetime allowance is a cap on the total you can build up in pensions before being subject to a lifetime allowance tax charge. Above this and you could face a tax charge of 25% or 55% on the excess.
Alone, this might not seem too complicated. But coupled with income tax, IHT and taking benefits, it can be costly if not planned properly.
For those with more complex positions, there are lesser-known tax-saving strategies available. These rules can and do change though and benefits depend on your circumstances. A financial adviser will stay up to date with rule changes and help you make the most of your allowances.
If you’re close to the limit you need to understand your options and make sure the solution fits your needs. If you’re not sure, speak to our advisory helpdesk to find out more.
5. You have numerous and complicated pension plans
Having different pension pots can make it harder to plan ahead for retirement. It’s often easier and clearer once you’ve consolidated your pensions.
But you shouldn’t rush into it. It’s vital to know what you hold, where it’s invested and any hidden benefits you may give up by transferring. There may also be excessive exit charges that might be applied.
Researching and comparing your various pensions can be time consuming. So leave it to an expert.
A financial adviser can review all your pensions and produce a tailored plan based on your retirement goals. They’ll also help you avoid the pitfalls or make the most of any historic benefits you didn’t know about.
Talk to us
If you’re facing a situation where you think personal financial advice could add value, our professional advisers can help.
The first step is to book a call back with our advisory helpdesk to talk through how advice works, and the charges involved. They won’t give advice on the call, but they’ll help you get a better idea of whether it’s right for you. Then if you want to take advice, they can put you in touch with an adviser.
Our advisory helpdesk aren't advisers. We can only provide advice to UK residents. If you’re resident overseas, unfortunately we’re unable to advise you.
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