Life is full of surprises, and while some are joyful, such as windfalls and successful career changes, others can be challenging. Many of us will experience illnesses, have care needs, and face unexpected expenses. However, by building a level of financial resilience, you’ll be more prepared for life’s “what ifs”. We look at the steps needed to help protect your future.
“Expect the unexpected.”
Oscar Wilde
Preparing for later life care costs
Most of us are unaware of the health conditions that we might face as we get older. We could get seriously ill or have a condition that impacts our cognitive ability to make important decisions. It’s often assumed that cognitive decline only affects those with dementia. But this can also occur as the result of a stroke, heart attack or brain injury as a result of an accident.
It’s important to ensure that you and your partner have both types of Lasting Powers of Attorney in place – Health & Welfare and Property & Financial Affairs. This will give those you choose as your attorneys the legal right to manage your affairs, such as your partner or a family member. Read more about cognitive decline in our blog, The financial and emotional toll of cognitive decline.
By stress-testing your finances and building resilience into your plan, you can protect your legacy and maximise the positive impact of your wealth. Carrying out a cash-flow planning exercise will enable you to plan for such “what ifs”. This helps to ensure you have an adequate financial buffer to cover potential care costs without derailing your other goals. It will also ensure that you have enough money from what’s left to pass on to your family.
Changes in family caregiver responsibilities
It’s a sad fact of life that many relationships will end and we will all lose someone we love at some point in our lives. Divorce and bereavement can often result in additional support needed for adult children or a surviving parent, which can quickly change your financial picture overnight. This can have knock-on effects on your legacy and any charitable giving.
If you are supporting a family member, your retirement planning might need to be reassessed from a financial perspective. You might also need to revisit your inheritance planning approach to help balance your priorities and ensure your future security. Therefore, it’s important to carry out the necessary cash-flow planning so you have enough income to cover your living costs and those you are supporting.
What to do with unexpected money
It’s worth noting that life occasionally surprises us with positive changes and windfalls, too! From selling a business to receiving an inheritance or winning the lottery, these events can be exciting but also require smart decision-making. It’s important to know how to manage your money efficiently, so you can enhance your legacy and not complicate it.
You’ll need to understand how to mitigate your tax liabilities when managing sudden large sums of money. As an example, this might involve restructuring your investment portfolios. If you’re a business owner, you’ll also need to consider long-term investments and tax planning for your company. Your main aim is to ensure your business assets continue to work efficiently and in line with your objectives.
Chartered Financial Planner, Nottingham
The Alzheimer’s Society is our chosen charity for 2025. In October, several members of the Balance: Wealth Planning team will be taking part in the Alzheimer’s Society Memory Walk at Wollaton Park in Nottingham. If you’re one of our clients, you may have received an invite to join us. For more information on how you can support us, see our chosen charity page.
Just like walking for a cause, financial resilience is about preparing for the “what-ifs” in life step by step. Unexpected health issues, such as care needs, disability, or illness, can take their toll on our lives and our finances. Changes in family dynamics can also have a big impact on our family finances, including divorce, bereavement or supporting adult children.
However, let’s not forget that many of us will enjoy some positive surprises too. From selling a business to receiving an inheritance, or an unexpected windfall, it’s of equal importance that you manage these situations with smart thinking.
At Balance: Wealth Planning, we can help you to future-proof your finances and prepare for costs in later life. Our financial planning team can carry out a financial review and cash-flow planning exercise to help you prepare for big life events. Together, we can help you achieve financial security and preserve your legacy with tax-efficient financial planning.
For advice on how to future-proof your finances, get in touch to speak to our financial planners.
Sources:
https://www.independentage.org/get-advice/money/looking-after-money
https://www.alzheimers.org.uk/get-support/legal-financial
