IMS Wealth – IMS Wealth

What’s Changing in 2027?

Your Pension and what might happen.

From 6 April 2027, unused pension funds and most lump sum death benefits will be included in your estate for Inheritance Tax (IHT) purposes

This is a major shift because:

Currently: Pension funds are usually outside your estate, so no IHT is due.
From 2027: Pension funds will be inside your estate, and subject to 40% IHT if your estate exceeds the nil-rate band (£325,000 per person or up to £1 million for a couple including the residence nil-rate band).

Why Wait to Take Lump Sums?

If you take taxable lump sums now, and then die before 2027, your estate could face double taxation:

Income Tax on the lump sum when you take it.
Inheritance Tax on the remaining funds if you die after 6 April 2027.

Example: Double Taxation Risk

Let’s say James has a £1 million pension pot, is aged 76, and takes a £100,000 lump sum in 2026.

He pays Income Tax on the lump sum (say 40% as a higher-rate taxpayer):
£100,000 × 40% = £40,000 tax, leaving £60,000.
James dies in 2028, and the remaining £900,000 is now part of his estate.
His estate exceeds the IHT threshold, so 40% IHT applies to the pension:
£900,000 × 40% = £360,000 tax.
Total tax paid:
£40,000 (Income Tax) + £360,000 (IHT) = £400,000.
Effective tax rate on the original £1 million: 40%.
But if the beneficiary is also taxed on withdrawals, the effective rate could reach 67–90%.

What If You Have a Spouse?

Good news: Transfers to a spouse or civil partner remain IHT-free, even after 2027

So if James leaves his pension to his wife:

No IHT is due.
She can continue to draw income from the pension.
But if she dies later and leaves the remaining pension to children, IHT will apply unless further planning is done.

Over Age 75: Income Tax Still Applies

If you die after age 75, your beneficiaries pay Income Tax on pension withdrawals at their own rate (e.g., 20%, 40%, or 45%)—even before 2027

From 2027, they may also face IHT on the inherited pension, unless they’re your spouse or a charity.

Planning Tips

Delay lump sum withdrawals unless needed for living expenses.
Spend other assets first (e.g., ISAs, savings) to preserve pension tax efficiency.
Review nominations to ensure your spouse is the primary beneficiary.
Consider annuities or gifting strategies to reduce estate value.
Use life insurance in trust to cover future IHT liabilities.

Summary

Scenario	Tax Impact Before 2027	Tax Impact After 2027
Pension left to spouse	No IHT	Still no IHT
Pension left to children	No IHT if No income tax if under 75 or Income tax if over 75	40% IHT No income tax if under 75 or Income tax if over 75
Lump sum taken now, death after 2027	Income Tax now + IHT later	Double taxation risk

Key IHT Exemptions & Planning Opportunities

1. Annual Gift Exemption

You can gift £3,000 per year tax-free.
If unused, you can carry forward the previous year’s allowance once, allowing £6,000 in a single year.
Can be split among multiple recipients.

2. Small Gifts

You can give £250 per person per year to any number of people, as long as they don’t also receive part of your £3,000 exemption.

3. Wedding Gifts

Tax-free limits based on relationship:
- £5,000 to a child
- £2,500 to a grandchild or great-grandchild
- £1,000 to anyone else

4. Gifts for Maintenance

Tax-free if for:
- Children under 18 (education/training)
- Elderly or infirm relatives
- Ex-spouses or civil partners

5. Charitable Donations

Gifts to UK charities are IHT-free.
If you leave 10% or more of your estate to charity, the IHT rate on the rest drops from 40% to 36%.

💡 Powerful Strategy: Gifts from Surplus Income

What Is It?

Gifts made regularly from your income (not capital) that don’t affect your standard of living are immediately exempt from IHT—no 7-year rule applies

Conditions:

From income (salary, pension, dividends, rental income—not capital).
Regular and habitual (e.g., monthly or annual payments).
Doesn’t reduce your lifestyle.

Example:

James gifts £500/month from his pension to his daughter:

Total: £6,000/year.
If documented properly, this is fully exempt from IHT—even if James dies within 7 years.

Tips:

Keep records of income and gifts.
Write a letter of intent stating the gifts are from surplus income.
Avoid gifting assets you still benefit from (e.g., living in a gifted house)—this is a gift with reservation and still taxable.

🧠 Strategic Planning Ideas

Use pension income for regular gifts to children or grandchildren.
Combine exemptions: e.g., £3,000 annual + £250 small gift + surplus income.
Gift early: The 7-year rule means gifts made earlier are more likely to be IHT-free.
Consider trusts: But get advice—some trusts trigger immediate IHT charges.
Review estate regularly: Especially with the 2027 pension inclusion rule.

Sources

Inheritance Tax on unused pension funds and death benefits – GOV.UK

How Inheritance Tax works: thresholds, rules and allowances: Rules on giving gifts – GOV.UK

⚠️ Disclaimer

Tax rules and FCA regulations are subject to change. The information provided reflects current legislation and proposed changes as of August 2025, including the inclusion of unused pension funds in estates from 6 April 2027. This does not constitute financial advice. Clients should seek personalised guidance from a regulated financial adviser before making decisions regarding pension withdrawals, estate planning, or gifting strategies.

How to Reclaim Overpaid Tax on UK Pensions: A Complete Guide

If you’ve recently accessed your pension and noticed that too much tax was deducted, you’re not alone. Many people in the UK face this issue when taking pension lump sums or flexibly accessing their pension pots. Fortunately, HMRC provides several ways to reclaim overpaid tax, depending on your circumstances. This guide walks you through the different scenarios and the correct forms to use, with direct links to each.

Why You Might Be Owed a Tax Refund

When you withdraw money from your pension, especially as a lump sum, HMRC often applies an emergency tax code. This can result in a higher-than-necessary deduction, particularly if it’s your first withdrawal in the tax year. The good news is that you can reclaim this overpaid tax using one of several forms, depending on your situation.

Which Form Should You Use?

1. Form P50 – If You’ve Stopped Working and Have No Further Income

Use this form if:

You’ve stopped working.
You’ve taken a pension lump sum.
You don’t expect to receive any more income in the tax year.

Where to get it:
Form P50 – Claim for repayment of tax when you have stopped working

2. Form P53 – For Small Pension Lump Sums (Trivial Commutation)

Use this form if:

You’ve taken a small pension pot as a lump sum (usually under £10,000).
You’re still working or receiving other income.

Where to get it:
Form P53 – Claim a tax refund on a small pension lump sum

3. Form P53Z – If You’ve Emptied Your Pension Pot

Use this form if:

You’ve taken your entire pension pot as a lump sum.
You’re still working or receiving other income.

Where to get it:
Form P53Z – Claim tax back after taking your whole pension pot

4. Form P55 – If You’ve Flexibly Accessed Part of Your Pension

Use this form if:

You’ve taken part of your pension pot.
You haven’t emptied the pot.
You’re not planning to take regular payments.
Your pension provider can’t refund the tax.

Where to get it:
Form P55 – Claim back tax on a flexibly accessed pension overpayment

How to Submit Your Claim

You can usually complete these forms:

Online via the GOV.UK website (you’ll need a Government Gateway account).
By post by downloading, printing, and mailing the form to HMRC.

Postal address for most forms, please check with HMRC:
Pay As You Earn
HM Revenue and Customs
BX9 1AS
United Kingdom

What You’ll Need

Before you start your claim, gather the following:

Your National Insurance number.
P45 from your pension provider (if applicable).
Details of any other income you expect to receive in the tax year.
Your pension provider’s PAYE reference number.

What Happens Next?

Once HMRC receives your form:

They’ll calculate any refund due.
You’ll receive a payable order (cheque) by post.
Refunds typically take 4 to 6 weeks, but this can vary.

Note: HMRC does not issue refunds via BACS for these claims, so ensure your postal address is up to date.

What If You Don’t Reclaim?

If you don’t submit a form, HMRC will automatically review your tax position at the end of the tax year (after 5 April) and issue a refund if you’ve overpaid. However, this can take several months, so submitting a form is the faster option.

Final Tips

Act promptly: The sooner you submit your form, the sooner you’ll receive your refund.
Use the correct form: Choosing the wrong form can delay your claim.
Keep records: Save copies of your forms and any correspondence with HMRC.

Conclusion

Reclaiming overpaid tax on your pension doesn’t have to be complicated. By understanding which form applies to your situation and submitting it with the right information, you can ensure you get back what you’re owed quickly and efficiently.

If you’re unsure which form to use or need help filling it out, consider speaking with a tax adviser or contacting HMRC directly.

The Art of Investing: Time in the Market vs. Timing the Market

Introduction

The world of investing can be a labyrinth of complexities and uncertainties, often tempting investors to try their hand at “timing the market” – predicting the perfect moment to buy or sell assets. However, for investors in the UK, a more prudent approach is to focus on “time in the market” rather than attempting to time it perfectly. In this blog, we will explore the advantages of adopting a long-term investment strategy and the benefits it can bring to investors in the UK.

The Pitfalls of Timing the Market

Timing the market is the act of trying to predict the best moments to buy or sell investments based on short-term fluctuations in the market. While some investors may seem to have mastered this art, the reality is that market timing is fraught with pitfalls and inherent risks. Predicting market movements consistently is a challenging task even for seasoned financial experts, let alone individual investors. Common pitfalls of market timing include:

Emotional Decision-Making: Attempting to time the market often leads to emotional decision-making driven by fear or greed. This can result in hasty and irrational choices that may negatively impact investment performance.
Missed Opportunities: By staying out of the market in anticipation of a better time to invest, investors risk missing out on potential gains during market upswings.
High Transaction Costs: Frequent buying and selling of assets result in higher transaction costs, which eat into overall investment returns.
Tax Implications: Capital gains taxes may apply to profitable trades, further reducing an investor’s net returns.
Complexity: Market timing requires constant monitoring and analysis, making investing a stressful and time-consuming endeavor.

The Benefits of Time in the Market

In contrast, a “time in the market” strategy advocates for a long-term investment horizon and a steadfast commitment to staying invested through various market cycles. Here are the benefits of adopting this approach:

Compound Interest: Long-term investors benefit from the powerful concept of compound interest, where earnings generate additional gains over time. This compounding effect can significantly enhance the overall return on investment.
Diversification: A long-term strategy allows for a diversified portfolio across different asset classes, sectors, and geographic regions. Diversification can help mitigate risk and reduce the impact of market fluctuations on the overall portfolio.
Reduced Stress: By focusing on the long-term, investors can avoid the stress associated with constantly monitoring market movements and making reactive decisions.
Time to Recover from Losses: Markets are inherently cyclical, and short-term downturns are not uncommon. Staying invested over the long run provides ample time for the market to recover from downturns, potentially regaining any temporary losses.
Aligning with Market Trends: The stock market has historically trended upwards over the long term. By being invested in the market for extended periods, investors can align themselves with this upward trend.

Conclusion

In the UK, as in any other country, adopting a “time in the market” approach is a more rational and practical investment strategy compared to trying to time the market. The unpredictable nature of financial markets makes timing the market a risky endeavor, prone to emotional decision-making and missed opportunities.

Instead, focusing on a long-term investment horizon allows investors to harness the power of compounding, diversify their holdings, and potentially reap the benefits of steady market growth over time. By embracing patience and discipline, UK investors can set themselves on a path towards a more prosperous financial future. Remember, successful investing is a journey, not a sprint.

With Profits Pension Plans

What are they?

With profits pension plans are a type of investment-based pension plan that offer policyholders the opportunity to participate in the profits of the insurance company. These plans are typically offered by insurance companies and are a type of deferred annuity that provides an income in retirement.

The way with profits pension plans work is that policyholders pay regular premiums into the plan, and these premiums are pooled together with those of other policyholders to create a large investment fund. The insurance company then invests this fund in a range of different assets, such as stocks, bonds, and property.

The returns on these investments are then used to pay out bonuses to policyholders. These bonuses can take the form of guaranteed bonuses, which are paid out at regular intervals, and terminal bonuses, which are paid out when the policy reaches maturity.

One of the key features of with profits pension plans is that they aim to smooth out investment returns over time. This means that the insurance company will hold back some of the investment returns in good years in order to pay out bonuses in bad years. This can help to protect policyholders from sudden fluctuations in investment returns and provide a more stable income in retirement.

However, with profits pension plans can also be complex and opaque, and policyholders may not fully understand how the bonuses are calculated or how the investment fund is managed. In addition, the returns on with profits pension plans may not keep up with inflation, and policyholders may face penalties if they want to withdraw their money early.

Guarantees

With profits pension plans typically offer policyholders some level of guarantee on their investment. The exact nature and extent of these guarantees can vary depending on the plan and the insurance company.

One common type of guarantee is a minimum guaranteed bonus rate. This means that the insurance company guarantees to pay a certain rate of bonus on the policy each year, regardless of how well the investment fund performs. For example, if the guaranteed bonus rate is 3%, the policyholder will receive a bonus of at least 3% on their investment each year.

Another type of guarantee is a minimum guaranteed payout. This means that the insurance company guarantees to pay out a minimum amount when the policy reaches maturity, regardless of how well the investment fund performs. For example, if the minimum guaranteed payout is £100,000, the policyholder will receive at least £100,000 when the policy matures.

Guarantees can provide policyholders with a level of security and peace of mind, but they can also come at a cost. For example, the insurance company may charge higher fees or offer lower returns in order to fund the guarantees.

It’s also worth noting that guarantees are only as good as the financial strength of the insurance company. If the insurance company goes bankrupt or becomes insolvent, the guarantees may not be honoured.

Market Value Reduction

Market Value Reductions (MVRs) are an important factor to consider when investing in with profits pension plans. MVRs are a mechanism that allows the insurance company to adjust the value of the policy if the policyholder decides to withdraw money from the plan early. The purpose of an MVR is to protect the remaining policyholders from the negative effects of a sudden large withdrawal from the fund.

When a policyholder requests an early withdrawal from a with profits pension plan, the insurance company may apply an MVR to the policy’s value. This means that the policyholder will receive less than the full value of the policy. The amount of the reduction is typically calculated based on the market value of the underlying assets in the investment fund at the time of withdrawal.

The amount of the MVR can vary depending on a range of factors, including the length of time the policy has been held, the amount of money being withdrawn, and the performance of the investment fund. In some cases, the MVR can be significant, and it’s important for policyholders to understand the potential impact on their investment.

It’s also worth noting that MVRs can be unpredictable and may be applied even if the investment fund has performed well. This can be frustrating for policyholders who may feel that they are being penalised for factors outside of their control.

Overall, while MVRs are an important mechanism for protecting the interests of remaining policyholders, they can also be a significant drawback of with profits pension plans. Potential policyholders should carefully consider the potential impact of MVRs before investing in a with profits pension plan.

Some disadvantages

While with profits pension plans offer some advantages, there are also several pitfalls that potential policyholders should be aware of. Here are some of the common drawbacks of with profits pension plans:

Lack of transparency: With profits pension plans can be complex and difficult to understand. Policyholders may not fully understand how their investment is being managed, how bonuses are calculated, or how charges and fees are applied. This lack of transparency can make it difficult for policyholders to make informed decisions about their pension plan.
Lower returns: With profits pension plans typically offer lower returns than other types of pension plans, such as unit-linked pension plans. This is because the insurance company holds back some of the investment returns in good years to pay out bonuses in bad years. As a result, policyholders may not see the full benefit of strong investment performance.
Penalties for early withdrawal: With profits pension plans are typically designed to be long-term investments, and policyholders may face penalties if they want to withdraw their money early. These penalties can be substantial and can eat into the value of the policy.
Limited investment options: With profits pension plans are typically managed by the insurance company, which means that policyholders have limited control over how their money is invested. This can be frustrating for policyholders who want to take a more active role in managing their pension fund.
Risks associated with the insurance company: With profits pension plans are only as good as the financial strength of the insurance company that manages them. If the insurance company becomes insolvent or fails, policyholders may lose some or all of their investment.

Overall, while with profits pension plans can offer some advantages, they are not suitable for everyone. Potential policyholders should carefully consider the pros and cons of with profits pension plans before making a decision. It’s also important to seek professional financial advice to ensure that the pension plan is aligned with their individual needs and goals.

Financial Services Compensation Scheme – investment protection

How is my money protected?

As your Independent Financial Adviser, we ensure you understand that the value of investments can fall as well as rise. You may also be concerned about how safe it is to hold your investments with one Platform or Fund Manager.

Are Platforms and Fund Providers regulated?

As Independent Advisers we use different companies to provide and distribute investments to our clients. The companies selected are authorised and regulated by the Financial Conduct Authority, which requires them to have appropriate systems and controls for managing their business, with strict rules about the way they hold client money and assets.

To check the registration for any regulated company, you can visit the Financial Conduct Authority website at http://www.fca.org.uk or telephone the FCA Consumer Help Line on 0800 111 6768.

How financially stable are Platforms and Fund Managers?

Financial Conduct Authority rules, mean that Platforms (Distributor’s) and Fund Managers (Providers) always hold a significant amount of liquid (easily accessible) capital. In the unlikely event this capital is required, it will help with the winding down of the business and make it easier to return your money and assets in an orderly way.

What is the difference between a fund provider and distributor?

Provider
A provider is a company that creates and manages its own investments. Also known as a ‘fund manager’. You can usually buy investments direct from these fund managers

Distributor
A distributor is a company that sells investments from a range of providers. Also known as an ‘investment platform’ You can usually use a distributor to buy investments from a wide range of providers.

The money you invest is protected by strict regulatory requirements, known as client money and asset rules. These rules apply no matter how much you invest, they also apply whether you hold all your investments with a single distributor, such as an Investment Platform, or you hold your investments through multiple distributors.

What protection do I have under the client money and asset rules?

Investment firms, providers and distributors, are very different from banks because they are required to separate client money and assets from their own resources. They are not permitted to use client money and assets for their own business activities, and your money would be ring-fenced in the unlikely event that they became insolvent. In the case of a default, the Administrator appointed is entitled to claim their costs for distributing client money and assets from the client money pool. Any shortfall in client money and assets will be covered by the FSCS up to a limit of £85,000 per client.

What happens if a distributor becomes insolvent?

When you invest through a distributor, e.g. a Platform any cash held on your behalf is placed with a range of different banks in designated client bank accounts. As the cash is kept completely separate from the distributor’s own money, if they became insolvent it would be returned to you in an orderly manner.

When you invest in funds, they are held by a Provider using a nominee structure. This allows them to administer your investments efficiently, while ensuring that you are clearly identified as their owner. This means that in the unlikely event of a Provider becoming insolvent, any money they owe will not be paid out with your funds. In fact, your money cannot be accessed by any creditors.

What happens if a provider becomes insolvent?

For mutual funds such as OEICS or Unit Trusts, a trustee or depositary holds the legal title to the underlying stocks in the fund (i.e. they are not owned by the provider). This means that if a provider, gets into financial difficulty, your investments would be protected from its creditors according to existing rules and regulatory limits.

What is the Financial Services Compensation Scheme?

The Financial Services Compensation Scheme (‘FSCS’) is an independent body set up by the Government under the Financial Services and Markets Act 2000 and funded by the financial services industry. It can pay you compensation if a firm is in default and cannot meet any valid claims against it.

In what circumstances might the FSCS apply to my investments?

The FSCS would only apply to your investments if the protection measures that distributors and providers have in place (as described above) were to fail.

The FSCS might apply if you lose money because your investments have not been administered correctly, or as a result of misrepresentation or fraud, and the authorised firm concerned has gone out of business and cannot pay compensation or return your investments or any cash held on your behalf.

The FSCS will not pay compensation if your investment performs poorly as a result of market conditions.

Are there limits to the amount of FSCS compensation?

Yes. The maximum amount of compensation payable to an individual under the FSCS will depend on the type of financial product that you hold and who the claim is against.

If a provider is in default, the limit is £85,000 per provider for UK domiciled mutual funds (OEICS and Unit Trusts).
If a distributor is in default, there is a limit of £85,000.
If one of the banks used to hold client money is in default then the limit is £85,000.

If you would like to know more, please visit the FSCS website or call the FSCS on 0800 678 1100.

If you invest through a Platform and hold UK domiciled mutual funds from both that Platform and other providers, does the limit per provider still apply?

Yes. The limit is still £85,000 per investment provider regardless of whether you hold your investments with one distributor or whether you hold them across multiple distributors.

Managing your money during difficult times

In uncertain times like this, thinking about your financial situation can be stressful. But there are things you can do that may help.

Fears over the spread of coronavirus are causing people uncertainty and real worry in different areas of their lives, from their health and wellbeing to work and finances. If you’re feeling any stress around your financial situation or future, read these tips to find out what you can do.

Look at your budget
If you’re ill, you’ve had your working hours reduced or have had to take unpaid holiday it can be a big financial shock. In order to find out how that’s affecting your finances, you need to know what you’ve got coming in and what you spend.

As well as making sure you’re claiming what you’re entitled to – including benefits and sick pay (read on for more on this) – you may need to see if you can cut back on your outgoings. Depending on your spending and needs, that might not be easy. But it’s an important first step.

Cutting back may mean seeing if you can do without things you’d normally buy, as well as getting a better deal on regular spending, such as gas, electricity, phone and broadband.

Review any debts or loans
Debts that may have been affordable a few weeks ago could now be causing you to worry if your income has dropped or might do so. Some banks have offered to defer mortgage and loan payments for a limited period for people affected by coronavirus. Contact your lender to see what their policy is around repayments, along with taking into account how any actions might affect your credit rating.

Some have also offered extra temporary support like increases in limits for credit card borrowing and cash withdrawal – again, check with your bank what they’re providing. If you do need to use a credit card to pay for essentials while things are a bit tight, make sure you plan how you’re going to make the repayments and be clear on what the restrictions are..

If you’re worried about debts or struggling to repay them, debt advice charities like StepChange or National Debtline offer free support and guidance.

Check if you’re entitled to sick pay
If you’re an employee earning at least £120 a week you’re entitled to Statutory Sick Pay (SSP), which gives you £95.85 a week for up to 28 weeks (in the 2020/21 tax year). If you’re on a zero-hours contract you can also claim SSP, as long as you meet the condition above.

Usually you need to be off work for four days in a row before SSP kicks in, but if your absence is related to coronavirus it will now be paid from the first day. You could also get extra sick pay from your employer – these schemes are often more generous than SSP so it’s worth checking your contract or asking your HR department.

See if you can claim any benefits
If you’re self-employed, a contractor or a freelance worker it’s very likely that you won’t receive SSP. If you become ill, you may be able to claim Employment and Support Allowance, or if you need help with childcare or housing costs you may be entitled to Universal Credit.

If you need them, check if you’re eligible for any benefits as soon as possible and don’t put off making a claim as it can take a while to process – the benefits calculator from financial support charity Turn2us can help you to work out what you’re entitled to.

Review your insurance policies
If you can’t work, check to see if you have any insurance policies that could help with your income or mortgage payments. If you do, make a claim as soon as you can – check the terms and conditions of your policy to see if and when you might be able to claim.

Spend less, save more
You may not be able to build up savings if your income has dropped, but if you’re able to save, it’s worth building up a cash buffer for emergencies. Even saving a small amount is better than nothing.

If you’re working from home rather than commuting to work, you’ll be spending less on travel and possibly things like lunches and coffees – you could consider putting this money into a savings account instead.

It’s also worth reviewing regular subscriptions like gym memberships that you may be able to freeze or cancel if you’re not going to use them for a while – just remember to check any terms and conditions beforehand to see what your options are and when (or if) you can make changes.

Don’t panic about your investments
If you have a pension (or an investment product), try to not panic if you see the value going down. It’s important to remember that pensions are long-term investments – and it’s normal for the value of investments to go up and down.

While it might be tempting to move investments now, it could be worth taking more of a long-term view, depending on what stage of life you’re at. If you’re thinking about switching anything or taking money out of your pension, let me know and we can discuss your options.

Watch out for scams
Fraudsters often take advantage of uncertain situations like the coronavirus outbreak to scam people out of their money. Make sure you’re clued up on the different types of scams out there, how to recognise and report them, how to protect yourself and what to do if you think you’ve been the victim of a scam.

Our next article will include more help on scams, check it out on Friday.

The Plan is the Path

None of us planned for this.

But your financial plan does have mechanisms in place that will help you get through this tough patch with the coronavirus and the financial market volatility. The key is not letting heightened emotions and bad headlines steer you towards decisions that could have a negative impact on your finances long after this crisis has passed.

Easier said than done, right?

These three steps will help you remember why you have a plan in the first place, what it’s designed to help you accomplish, and how we can help.

1. Acknowledge your emotions.

Worry. Anger. Uncertainty. Nervousness. Maybe even a disbelieving chuckle or two at the craziness of it all.

Whatever you’re feeling right now is OK. We understand that your financial concerns are just one part of a very complicated and very personal situation involving your family, your work, your health care, and your basic needs. Add in the anxiety we’re all feeling about the situation in the wider world and you wouldn’t be human if your emotions weren’t a bit jumbled right now.

So please understand that when we advise you to take emotions out of your financial decision making during a crisis, we’re not advising you to ignore what you’re feeling. On the contrary, we encourage you to talk through your feelings with your spouse, children, co-workers, and other close friends or family. Burying your emotions only makes stressful situations more stressful. Our human capacity for empathy, understanding, connection, and mutual concern is going to help us all weather this storm. It’s also going to lead you towards healthier and more productive outlets for your feelings, such as charitable giving and finding creative ways to support local businesses.

2. Tell yourself your story.

Once your feelings are out in the open, it will be easier for you to think about the financial part of your situation with a clear head.

Try, for a moment, to set aside the market swings that may have been dominating your news feeds for the past few weeks. Instead, think about the reason that you started working with us in the first place.

In those first few meetings, we didn’t talk about how to time your investments to world news or market fluctuations. Instead, we talked about you. About the life you desire for you and your loved ones.

And finally, we discussed how our Life-Centered Planning process can help you get that best possible life with the money you have.

3. Prioritise Now, adjust for Soon, stay on track for Later.

Because we plan for clients’ lives, not just their money, we always take in a wide view of financial progress. Today’s big market dip will look like a blip with a thirty or forty-year panoramic perspective. But “stick to your plan” doesn’t mean we don’t do anything during a major market correction, especially if you’re at or nearing retirement age. It means that the moves we contemplate are based more on your upcoming lifeline transitions than they are on unpredictable market movements.

To keep yourself focused on things you can plan for, grab a sheet of paper and sit down with your spouse. Divide that sheet into three sections:

Now: Financial concerns that need to be addressed as soon as possible, such as paying next month’s bills, a necessary home repair, or a health care issue.
Soon: Important items 6-12 months out that you still have time to prepare for.
Later: Everything else.

Most of these items will already be things we’ve discussed and planned for over the course of our work together. But it’s possible that recent events have filled up your Now’s and bumped some Soon’s into Later’s. We deliberately designed your Life-Centered Plan so that it can be responsive to these changing priorities and transitions while still being sensitive to larger economic realities.

To remind yourself of what you’re truly planning for, it might be a good idea to revisit your most recent Plan. The current crisis might alter your path a little bit. But your destination may still be the same.

If you haven’t got a Lifestyle Financial Plan, why not talk to us about how we can help you, as we do our existing clients.

Financial Planning is About Making Your Life Plan a Reality

Many people who have just begun working with us are surprised by how our planning process starts. We don’t begin by talking about your Pension, ISAs, or how much you’re saving. Instead, we begin by talking about you, not your money.

Putting your life before your financial plan.

As Life-Centered Planners, our process begins with understanding your life plan. We start by asking you about your family, your work, your home, your goals, and the things that you value the most.

Our job is to build a financial plan that will help you make your life plan a reality.

Of course, building wealth that will provide for your family and keep you comfortable today and in retirement is a part of that plan. So is monitoring your investments and assets.

But we believe maximising your Return on Life is just as important, if not more so. People who view money as an end in and of itself never feel like they have enough money. People who learn to view money as a tool start to see a whole new world of possibilities open in front of them.

Feeling free.

One of the most important things your money can do for you is provide a sense of freedom. If you don’t feel locked into chasing after the next pound, you’ll start exploring what more you can get out of life than just more money.

Feeling free to use your money in ways that fulfill you is going to become extremely important once you retire. Afterall, you’re going to have to do something with the 40 hours every week you used to spend working! But you’re also going to have to allow yourself to stop focusing on saving and start enjoying the life that your assets can provide.

Again, having money and building wealth is a part of the plan. But it’s not THE plan in and of itself.

The earlier you start thinking about how you can use your money to balance your vocation with vacation, your sense of personal and professional progress with recreation and pleasure, and the demands of supporting your family with achieving your individual goals, the freer you’re going to feel.

And achieving that kind of freedom with your money isn’t just going to help you sleep soundly at night – it’s going to make you feel excited to get out of bed the next morning.

What’s coming next?

So, when does the planning process end?

If you’re like most of the people we work with, never.

Life-Centered Planning isn’t about hitting some number with your savings, investments, and assets. And we’re much more concerned about how your life is going than how the markets are performing.

Instead, the kinds of adjustments we’re going to make throughout the life of your plan will be in response to major transitions in your life.

Some transitions we’ll be able to anticipate, like a child going to college, a big family holiday you’ve been planning for, and, for many of you, the actual date of your retirement. Other transitions, like a sudden illness or a big move for work, we’ll help you adjust for as necessary.

In some cases, your life plan might change simply because you want something different out of life. You might start contemplating a career change. You might decide home doesn’t feel like home anymore and start looking for a new house. You might lose yourself in a new hobby and decide to invest some time and money in perfecting it. You might decide it’s time to be your own boss and start a brand new company.

Planning for and reacting to these moments where your life and your money intersect is what we do best. Talk to us about how Life-Centered Planning can help you get the best life possible with the money you have.

3 Ways to Know When You Are Ready to Retire

There’s a pretty good chance that your parents and grandparents retired just because they turned 65. Today’s retirement is a bit more complicated than that. While age is still an important factor, your ability to connect your financial resources to your lifestyle goals is what will truly determine if you’re ready to retire.

Here are three important markers to cross before you crack open your nest egg:

1. You’re financially ready.

The most common question we field from our clients is, “How much do I need to retire?” While there’s no magic number to hit, a few key checkpoints are:

You have a budget. Many clients who are preparing to retire tell us they’ve never kept a budget before. Time to start! If you have any big plans for early in your retirement, like remodeling your home or a dream holiday, let us know so we can discuss options.
Your debts are paid. No, you don’t necessarily need to pay off a fixed-rate mortgage before you retire. But try to reduce or eliminate credit card balances and any other loans that are charging you interest.
Your age, retirement accounts, and State Pension plan are all in-sync. If you’re planning on retiring early, be sure that your retirement accounts won’t charge you any early withdrawal penalties for which you’re not prepared. Also keep in mind how much your State Pension might be worth, and importantly when you might receive it.

2. You’re emotionally ready.

We spend so much of our lives working that our jobs become a large part of our identities. Rediscovering who we are once we stop working can be a major retirement challenge. To prepare for this emotional transition:

Talk to your partner ahead of time. Don’t wait until your last day of work to discuss how both of you feel about retirement. What do each of you imagine life will be like? What are the things you’re excited to do? What are you afraid of? What can each of you do to make this new phase of life as fulfilling as possible?
Make a list. What are the things you’re passionate about? Something you’ve always wished you knew more about? A skill you’d like to develop? A cause that’s important to you? An ambitious business idea that was too ambitious for your former employer?
Check that your estate plan is in order. It’s understandable that many people avoid this part of their retirement planning. But putting together a legacy that could impact your family and community for generations can have tremendous emotional benefits. The peace of mind that comes from knowing the people you care about are taken care of can empower you to worry a little less and enjoy your retirement more.

3. You’re ready to do new things.

Ideally, the financial piece of this conversation should make you feel free enough to create a new retirement schedule based on the emotional piece. Plan your days around the people and passions that get you out of bed in the morning. Some ideas:

Work at something you love. Take a part-time job at a company that interests you. Turn that crazy idea you couldn’t sell to your old boss into your own business. Consult. Teach. Volunteer.
Keep learning. Brush up your high school French by enrolling in an online course. Learn some basic web design so you can showcase your photography portfolio or create an online store for your crafts. Sign up for cooking classes and get some new meals in your weekly rotation.
Get better at having fun. What’s the best way to lower your handicap or perfect your backhand? Take lessons from a pro. The second best? Organize weekly games with friends and family.
Travel. Planning out a big holiday can be a fun project for couples to do to together. And while you’re looking forward to that dream trip, take a few weekend jaunts out of town. Stay at the new bed and breakfast you keep hearing about. Visit your grandkids. Go on the road with a favorite sports team and enjoy the local flavor in a different city.

If you’re nearing retirement and struggling with these issues, working through the Return on Life tools with us might provide some clarity. Let’s discuss how we can help get you ready for the best retirement possible with the money you have.

The Purpose of Money is NOT Just to Make More of It

Imagine that you’re living in a tent on an open plain.

One day you plant a tree. For the next 40 years, you water it. You protect it from harsh weather and animals. You never pick its fruit. You don’t climb it for fun. You don’t take a break and rest in its shade. You don’t even cut down some branches to build a house. You never go anywhere or do anything else because you’re focused solely on growing that tree bigger and bigger.

Finally, one day, just after your 65^th birthday, the tree stops growing.

You look up at its enormous trunk and wide spread of branches and say to yourself …

“What was that for?”

Many of us treat our financial planning in a similar fashion. We become so caught up in the work that goes into “growing the tree” that we never think about harvesting the apples or timber to make a better life for ourselves. As long as our tree keeps getting bigger, we keep putting in the work of growing it, even if that work doesn’t engage our interests or put our unique talents to their highest purposes.

Then retirement rolls around.

Faced with the prospect of no longer working, some soon-to-be-retirees feel lost. Their sense of purpose was so connected to working hard to make more money that they never stopped to ask themselves what that next pound was really for.

Some of these people push off retirement as long as they physically can to keep chasing after more money that they don’t really need and will never actually spend.

Others become so concerned about running out of money that they live too conservatively and never enjoy their retirement.

And others potter aimlessly around the house re-arranging the furniture for the 10^th time.

A better sense of purpose.

There is a purpose to having money and growing your wealth. But what money can’t do is create purpose in and of itself.

Because eventually, your tree is going to stop growing. You’ll be able to live comfortably off the money you’ve saved and the income that your investments will continue to generate. After a lifetime of working hard and following your financial plan, your return on investment will be financial security in retirement.

That’s when it’s time to stop worrying about the tree and start harvesting.

That’s when it’s time to stop focusing on your return on investment and start enjoying a better Return on Life.

But here’s the thing—the earlier you’re able to make this shift into a ROL mindset, the sooner you’ll be able to live the best life possible with the money you have. Don’t wait until you’re 65 to start harvesting that tree and enjoying life. You can trim that tree a bit each year, enjoy life today, while still growing it for the future.

Enjoying life along the way will make your eventual transition to retirement even easier. Instead of struggling to replace work with leisure, you’ll be ready to pour even more of your time and energy into the activities that really matter to you.

Start by asking yourself, “What is my money really for?”

Is it for going on dream holidays with your spouse? Is it for taking classes that enrich your mind and body? A second house in the country for weekend getaways? As much golf or tennis as you can squeeze into a day? The freedom to volunteer your time and professional expertise at an organisation that’s making your community better? Finishing a major home renovation you’ve been putting off? Seed money to grow your own business?

Your life will take on a brilliant luster when you start to use your means in a meaningful way. Let’s talk about the interactive tools and exercises we use to help people like you find that meaning and put their lives at the center of the financial planning process.