Investments | 17 October 2022

Golden rules to retirement planning: Protecting your wealth

In the final part of our retirement series, we look at what you can do to protect your wealth against the unexpected.

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Planning for the future also means protecting that future. After all, you insure your house, your car and your prized possessions, why wouldn’t you insure the money that makes it all possible?

The first step is making sure you have the right kind of cover in place so that you and your loved ones are protected should life take a turn for the worse.

There’s an old saying, “retirement is wonderful if you have two essentials – much to live on and much to live for.” Having worked hard to build your wealth, it would be remiss not to make sure you and your family can make the most of it as time goes on. 

 

Three ways to cover your bases

There are three key areas of wealth protection we believe you should consider first and foremost:

There’s an old saying, “retirement is wonderful if you have two essentials – much to live on and much to live for.” Having worked hard to build your wealth, it would be remiss not to make sure you and your family can make the most of it as time goes on.Stagflation became financially synonymous with the difficulties the UK and other economies faced in the 1970s. The oil producing organisation OPEC embargoed oil exports to many western nations, pushing up oil and energy prices dramatically. The rise in the cost of living, fuelled in part by wage price spirals, coincided with stagnant economic growth, and unemployment was high while things got more expensive. This resulted in stagflation.

Although we currently have an energy shock, especially in Europe, as a result of the Russian invasion of Ukraine, the main driver of today’s inflation pressures was the pandemic. It led to a large demand for goods when strained and locked-down supply chains couldn’t cope. 

This is a long-term insurance policy that provides regular payments to replace part of your income if you’re unable to work due to illness or injury. It continues to pay out until you can start working again, or until you retire, reach the end of the policy term or pass away. Income protection can be claimed as often as you need it while the policy lasts.

There are a couple of key ways you could provide financial support to help your family maintain their lifestyle should you pass away, ensuring they get the money they need. You could also potentially save them a lot of difficult red tape at an already difficult time.

Life insurance is a policy that covers you for a specific period and pays out a lump sum or regular income when you die, if you pass away during the term. Life assurance, on the other hand, pays out a lump sum when you die, whenever that may be. If you were to pass away without the right cover in place, it could take months, even years, for your family to battle through probate. But by arranging suitable protection, the money could be available immediately to support their needs.

A life assurance policy might be subject to inheritance tax if paid to your estate, so depending on your circumstances it could be worth considering putting your life assurance into a trust. 

This pays out a lump sum if you get one of the specific medical conditions or injuries included in the policy. The tax-free, one-off payment helps with any costs which may arise during a difficult time, including the bill for your treatment or any subsequent changes needed at home, such as wheelchair access. It can also help cover your mortgage or rent. Critical illness cover is typically taken out alongside other types of insurance, such as income protection and life assurance.

  • 1. Income protection

    This is a long-term insurance policy that provides regular payments to replace part of your income if you’re unable to work due to illness or injury. It continues to pay out until you can start working again, or until you retire, reach the end of the policy term or pass away. Income protection can be claimed as often as you need it while the policy lasts.

  • 2. Life assurance versus life insurance

    There are a couple of key ways you could provide financial support to help your family maintain their lifestyle should you pass away, ensuring they get the money they need. You could also potentially save them a lot of difficult red tape at an already difficult time.

    Life insurance is a policy that covers you for a specific period and pays out a lump sum or regular income when you die, if you pass away during the term. Life assurance, on the other hand, pays out a lump sum when you die, whenever that may be. If you were to pass away without the right cover in place, it could take months, even years, for your family to battle through probate. But by arranging suitable protection, the money could be available immediately to support their needs.

    A life assurance policy might be subject to inheritance tax if paid to your estate, so depending on your circumstances it could be worth considering putting your life assurance into a trust. 

  • 3. Critical illness cover

    This pays out a lump sum if you get one of the specific medical conditions or injuries included in the policy. The tax-free, one-off payment helps with any costs which may arise during a difficult time, including the bill for your treatment or any subsequent changes needed at home, such as wheelchair access. It can also help cover your 

If you’re a Coutts client, your private banker can put you in touch with the experts at Coutts to talk through what might work best for you – your very own protection package.

 

assets in order: THE POTENTIAL BENEFITS OF ONE PENSION

Protecting your wealth is, of course, about more than just having the right insurance in place. It’s also vital that you have a clear idea how your wealth is spread and whether your assets are in the right place in the run up to retirement.

A classic example of this involves consolidating your pensions. Do you have multiple pensions? If so, do you even know how much money you have in them? The same question could be asked of any ISAs or other investments you might have. Having your finances in one place gives you far greater visibility over your retirement pot, making it easier to manage, and could help you cut fees.

Of course, there could be good reasons to keep your pensions where they are instead. There may be high exit fees, for example, or your existing arrangements might give you a guaranteed rate of return. If in doubt, you should get advice from an independent, qualified adviser.

 

FIND OUT MORE ABOUT BRINGING YOUR PENSIONS TOGETHER AT COUTTS
TAKE A LOOK AT OUR OTHER ARTICLES IN THIS SERIES – ON WRITING A WILL AND MAKING THE MOST OF YOUR PENSION.
 

Tax reliefs referred to are those applying under current legislation which may change. The availability and value of any tax reliefs will depend on your individual circumstances. Advice and product fees may apply.

When investing, such as through a pension, past performance should not be taken as a guide to future performance. The final value of your pension fund will depend primarily on how much has been paid in and how well the fund's investments have performed. The value of investments can fall as well as rise, and you may not get back the full amount you invest.

To have a Coutts Invest pension, you must be over the age of 18 and under the age of 75 and be a UK resident for tax purposes. You cannot make contributions if you are a US citizen or US Green Card holder. You cannot access your pension benefits before the age of 55. Eligible pensions only. Fees and charges apply.

We may withdraw our pensions cash offer any time before 11 November 2022. If you meet the eligibility criteria, the cash reward will be paid no later than 31 May 2023. Terms and conditions apply.  There’s an old saying, “retirement is wonderful if you have two essentials – much to live on and much to live for.” Having worked hard to build your wealth, it would be remiss not to make sure you and your family can make the most of it as time goes on.Stagflation became financially synonymous with the difficulties the UK and other economies faced in the 1970s. The oil producing organisation OPEC embargoed oil exports to many western nations, pushing up oil and energy prices dramatically. The rise in the cost of living, fuelled in part by wage price spirals, coincided with stagnant economic growth, and unemployment was high while things got more expensive. This resulted in stagflation.

Although we currently have an energy shock, especially in Europe, as a result of the Russian invasion of Ukraine, the main driver of today’s inflation pressures was the pandemic. It led to a large demand for goods when strained and locked-down supply chains couldn’t cope. 

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