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Is There A “Perfect” Financial Plan For Someone Over 55?

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This article is for information purposes only, and should not be regarded as financial advice. With investments, your capital is always at risk. The value of your investment can go down as well as up, and you may get back less than you invest. Seek professional financial advice before embarking on any important investment or pension decisions.


Is there an ideal financial plan for UK residents in their 50s and 60s?

As financial advisers in Leicester, we can tell you that the answer is partly yes. There are indeed effective, universal principles when it comes to sound financial planning. These apply to virtually everyone, and we’ll look at these in a minute.

On the other hand, the answer is no. Your financial plan will likely differ from someone else’s. The factors influencing the distinct form of your own financial plan include:

  • Your goals in retirement
  • Your debts
  • Your current investments and savings
  • Your earnings
  • The size and nature of your estate
  • The ever-changing financial, regulatory environment

So where does that leave you? First of all, it means there are certain timeless, universal principles which you should ensure feature in your financial plan.

Secondly, it means you need to work carefully with a financial adviser to craft a plan unique to your particular needs, goals and circumstances.

Let’s look at the more universal parts of your financial plan, before examining the bespoke ones.

Features of an “Ideal” Financial Plan


#1 Audit your income and expenses

When we give financial advice to new clients in Nottingham, one of the first things we do together is look at what makes you money each month, and what costs you.

This exercise alone is hugely useful within an ideal financial plan. It can result for instance, in large, unnecessary expenses being axed or replaced – leaving you more disposable income.

However, the next step is to then compare your budget to what it is likely to be in retirement. Will your expenses and income change dramatically?

For instance, your mortgage might well be paid off by then. The children will (hopefully!) have left home. Your work commute costs will likely disappear.

However, you might also do more long distance holidays. Try and map it all out in a detailed spreadsheet, and do the sums.


#2 Diversify and balance your portfolio

Every financial plan will have an investment strategy of sorts within it.

These will differ according to your objectives, risk tolerance and so forth. However, one common thread running through all sound investment strategies is “diversification”.

Never put all of your money into one company’s stocks, for instance. Facebook or Amazon might be doing well at that moment. But if they fall in value or even fail, your money is at risk.

By spreading your investments out across different, strategically-chosen companies and asset classes (e.g. bonds, equities etc.), you can minimise your risk.


#3 Review regularly

Every financial plan should be assessed at least once a year, to check it is performing as intended and in line with your goals.

It can really help to work with a qualified, experienced financial adviser in this respect. For instance, they will be better able to identify opportunities to optimise, and re-structure, aspects of your investment portfolio.

Tailored Areas Of Your “Ideal” Financial Plan


Time now to look at some of the areas where your ideal financial plan will differ from others.


#1 Your Goals

Everyone has different goals in retirement. As financial advisers, we have some clients who want to retire early, for instance, and others who want to work well into old age.

Some want to travel around the world when they stop working. Others want to stay relatively home-based, and focus on helping raise their grandchildren.

Some want a very luxurious retirement lifestyle. Others have more modest ambitions.

At the outset, therefore, it is important to define what it is you want to achieve in retirement, as well as what lifestyle you want.

Once your goals are defined, a financial adviser can help you determine whether these are realistic, and if so, help you articulate a plan to achieve them.


#2 Your Financial Situation

Related to your goals is your financial situation.

For instance, suppose Person A has £50,000 in savings. She has 6 years of mortgage payments left before she owns her home, but no major investments. She has an average income, lives alone, and has two grown up children.

Then there is Person B. He has very little in the way of savings, but he has a large investment portfolio. He lives with his wife in a rented home. Neither of them has ever owned property or had children. Both earn high incomes.

This person is in a very different financial situation from Person A. Neither is necessarily superior, but they both need to assess their financial strengths, weaknesses, opportunities and threats in order to devise a sensible financial plan to achieve their goals.

You need to do the same.


#3 The Financial Landscape

The rules are frequently changing in the world of pensions, investments, savings and tax. Your financial plan therefore needs to prepare for and anticipate all of this, as much as possible.

For instance, the state pension age has already been changed for men and women, and it is quite likely to rise again in future years as life expectancies continue to rise.

The age from which you can currently access your private pension is 55. However, down the line this could change to be fixed to 10 years below the state retirement age.

If the state pension age continues to rise, therefore, so could the age at which you can access your private pension.