With one week to go until our Ready, Steady, Retire! book launch and Boom! documentary screening, I am thrilled to announce that Ready, Steady, Retire! has gone to print and we are so excited for the books to be delivered next week.
You can pre-order your copy exclusively here.
In light of this great progress, here is another chapter snippet from the book, Chapter Three: How to Retire Successfully.
Chapter 3: How to Retire Successfully
The definition of a successful retirement is different for everyone, but there are some elements that are common to most retirees. Being fulfilled is arguably the most important. Alongside feeling fulfilled in your retirement years sit making a difference – whether through a charitable or work role, or through some other contribution to society or family – creating a plan for how you wish to live in later life, and passing on wealth to your loved ones. I have included a snippet from the section in my book on passing on wealth this month, so here goes:
Passing on Wealth
As the post-war generation ages, thoughts turn to how best to pass on their wealth to their loved ones.
As the parents of Baby Boomers pass away, many find themselves inheriting money, which can complicate their own estate planning further. As we have already revealed, more than 80% of the nation’s £6.7 trillion pounds wealth is owned by Baby Boomers.
Of the £2.6 trillion in shares or savings, Boomers own more than £1 trillion, as well as 40% of the £2.5 trillion tied up in property. Boomers account for a third of Britain’s £1.8 trillion in pensions. Having a home has proved such an astonishingly good investment that 1 in 5 Boomers owns a second home.
It’s no wonder then that many Baby Boomers enter retirement with estates worth in excess of the nil rate band applicable for Inheritance Tax (IHT).
When inheriting from their parents, this windfall can increase their estate’s IHT liability yet further, so seeking specific tax advice from a qualified wealth manager is advisable at this stage to ensure wealth inherited by Baby Boomers is done so as tax efficiently as possible. In some cases it is sensible to bypass the Boomers and pass the money straight on to the next generation.
This has the effect of not increasing the value of the Boomers’ estates, while perhaps providing their children with a step onto the property ladder, at a time when the average age of first time buyers is higher than ever before.
As Boomers then look to passing their wealth on to their own children, a fully informed consideration of their financial needs throughout retirement is essential to long-term financial security. This means considering what the retirees’ expenditure needs will be for the rest of their lives, taking account of possible care home funding, to ensure that wealth isn’t passed on too early.
Planning when is the best time to transfer wealth to children and grandchildren can be difficult. With their children’s best interests at heart, many retirees have mixed feelings on when wealth is most efficiently transferred to the next generation.
The phenomenon of “shirtsleeves to shirtsleeves in three generations” is a well-documented one; one generation starts with nothing but through a process of hard work manages to amass and build up wealth, saving carefully for the long-term benefit of their family. The next generation inherits their parents’ hard work ethos and manages to continue to build the family’s wealth, only to see those precious savings squandered by their children through poor investment choices or unwise spending habits.
Unfortunately the values of hard-work and saving have not been adopted by the third generation, as they have never had to work for anything themselves.
Speaking about money frankly within families is often difficult. If discussions about how and when wealth should be transferred are left until the later stages of retirement, this can become a highly emotional and incredibly challenging discussion, for everyone involved.
To ensure that your family can use inherited wealth to their best advantage it is wise to talk about your wishes as early as possible.