Do I need a financial lifetime plan ?

For the vast majority of people the idea of personal finances and the world of savings and investing can appear daunting, confusing and complicated. Probably because we are never taught the basics from school education or our parents as the subject is considered taboo to discuss.

But have your ever considered the following key ideas or thoughts !

• at what age would you like to retire ?
• would you stop work completely, or in phases by semi-retiring ?
• where will you be living in future ?
• will you downsize or move overseas ?
• at what age will you be mortgage free, or do you carry on renting ?
• What sort of income will you need to fund lifestyle, holidays etc ?
• is you future years affecting by any ill-health or medical conditions ?
• Do you create a legacy and live windfall or inheritance to family members ?
• How would you spend your days, is it travelling, new hobbies and clubs ?
• Or will it be spent minding the grandchildren or elderly parents ?

By getting a plan in place and creating some kind of long term goal, you can achieve your financial dream and aims. Plus you don’t have to be old or retire at state pension age. You can retire whenever you want within reason, you just have to be rich enough, to fund that future lifestyle.

By creating a lifetime plan or even for the short term (2-5 years), medium (10 – 15 years) or long term (20+ years). You can achieve your future aims, to benefit you and your family.

Your financial planning is constantly changing over time. What you need to focus on when
your young might not be the same when your living with parents. What about paying yourself through University, or buying your 1st property, starting on a career journey.

What about raising children and starting a family, or the later years clearing the mortgage and becoming debt free. Or the long term goal, may be to retire earlier that expected.

So over the many years, your key financial objectives and needs will change over time.

So let’s look at the key stages as part of a lifetime financial plan !

The early years (in your 20’s)

At this stage, you’re likely starting your career and enjoying the freedom of early years in adulthood. Are you planning on staring on in education, such as college, University, or some kind of apprenticeship. Or do you go straight into paid employment on an entry level job. So this phase of life is key to setting some basic financial foundations.

• have you ever created a personal of finance budget, or have your parents done everything for you.
• Where does your money currently go, is it socialising and eating out, entertainment such as cinema, pop concerts, festivals, or holidays and weekend breaks.
• You will be very surprised at where you money actually goes, so keep a record of any income and expenditure when starting out.
• have you ever set money aside for an emergency fund, or do you live day to day or do your parents help you out. What about emergency repairs to a car, how do you fund that next holiday or big ticket item.
• Does you fund your lifestyle on credit cards, loans or debts as short term fix. We now live in an age of instant gratification, where we all want the nice things now. As we live in a western society and most people, want the lifestyle they see on social media. We all want things now and are not prepared to wait by so, by doing something called delayed gratification.
• If you have gained employment, have you been enrolled into a workplace pension. All employer’s will offer a simple Auto enrolment scheme (known as DC pot). It generally free money from your employer to fund later years , when you retire. But can you afford to make these contributions, and remember you money will be invested for many years. The current minimum pension age is 55, although this will increase to age 57 in April 2028.

Your early career years (your 30’s)

In your 30’s you should have become more responsible and disciplined, and you may a lot of responsibilities to manage. Hopefully you are settled in a career and your pay has been increased as you achieve better paid positions in the workplace.

But what about any costs that you are incurring, such as mortgage or rental payments. As you have probably left your family home and maybe settled down with a partner.

So let’s consider the following key points:

• Can you afford your monthly rental payments to cover where you live.
• Are you paying monthly mortgage payments and are they manageable.
• What about moving to a bigger house, if you have children and the family is growing
• Are you paying into a workplace pension either DC or DC, can you afford to increase pension contributions to get free money from your money, to build up your pension pot value.
• Have you got life assurance in place, to cover the cost of clearing the mortgage in worst case scenario. or what about sickness or critical illness if you have young children.
• If you have young children, has a partner’s salary dropped ?
• or what about the cost to cover nursery fees childcare, school fees,
• Have your holidays become more expensive by having children, or less frequent
• Do you still eat out and socialise as much, or have your spending habits changed.
• If you do have a partner or young children, have you set up a will. Or completed nomination forms across any pensions that you may have.
• What about the idea of saving more money aside for young children, to cover university fees in future, or some kind of trust fund for when they are older.

Your so-called peak earning years (Your 40’s)

By now you should be truly settled in family life, or have progressed to a high position within the corporate world or area of employment. It may be that your circumstances have changed, you may have got divorced or on a 2nd marriage. Or the children may not be babies anymore but are now teenagers and have have new demands on your finances and resources.

So let’s consider some key points:

• do you still have a large mortgage, against initial property, or has it been increased as you may have moved up the property ladder to bigger houses.
• Or have you increased the mortgage, each time you move house or do some home improvements, such as extensions, extra rooms, loft conversions.
• What about your pension contributions, are you still contributing to a scheme. It may be that you have more around employers and you may have numerous pots across different providers.
• Are they all manageable, can you look after there admin, or do you have any missing pensions. (could you use Pension Tracing service) to find them via: http://www.gov.uk/find-pension-contact-details
• Are you pension pots on track to give you a decent income in retirement, where are they invested. Are they in a default or lifestyle fund, or the same funds that you picked many years ago. So get actively involved with them and look at the statements, fees and charges and investment options and performance.
• Do you have any debts, such as credit cards, bank loans, car finance that could be reduced or eliminated, now you may be earning a good salary. Or for your mortgage, could you be making overpayments to pay off early, so you could retire earlier than expected, or be mortgage free in retirement. For most people it’s their biggest expense or financial outlay.

The later years (your 50’s)

By now your main aims may to become mortgage free, or planning for your retirement. Or maybe getting the children through University. Or it may be that grandchildren arrive on the family scene. The end game may be in sight and your finances may become focused on specific key targets or ambitions.

• have you still got a mortgage, it may be relatively small, but what is your plan to clear it.
• Or are you still renting and now missed the chance to own your own home.
• Have you considered the idea of downsizing and decluttering.
• You should now be focusing on your retirement plans, as your retirement age or selected retirement date is creeping up on you. At present you can access a pension at age 57, although this will increase to age 57 in April 2028.
• What about your health, are you still fit, healthy and active. Or Are have you developed any medical conditions, such as HBP, high cholesterol, Diabetes, Arthritis etc which may be affecting you on a daily basis.
• Are you retirement plans on track, have you considered using the free and impartial guidance service on: http://www.moneyhelper.org.uk to discuss your options on accessing a defined contribution pension.
• Do you have full state pension entitlement, so have you obtained a forecast on: http://www.gov.uk/check-state-pension (based upon your NI record)
• Have you considered using an IFA as part of some estate planning.
• Have you got a will or power of attorney in place to simply your financial affairs.
• Are your family nominated on your pension pots as beneficiaries.
• Do you have to consider speaking to a financial adviser about inheritance tax issues

Your retirement years (your 60’s)

It may be the you have finally managed to retire after working for most of your adult lifetime. Hopefully you are in a position that you can afford to retire and are enjoying the later years in life, doing all the things that you have previously delayed as a result of working.

Is the dream or idea all that you expected, does it met your expectations or requirements. Are you considered well off or financially free or are your struggling to pay bills so existing on a frugal lifestyle.

Did you manage to retire on your terms, was it forced on you from redundancy, or even worse because of ill-health and you were now longer fit and able to perform that job role.

So let’s consider some final key points:

• Is your lifestyle being funded by the state pension only, currently £ 230.25 per week (as of April 2025), or do you have separate pension provisions.
• Are you in receipt of gold-plated final salary pension (DB) where the pension income is defined and guaranteed by sponsoring employer. Or it could be with NHS, Teacher’s Pension, Local Authority or Civil Service to name a few.
• Do you have several Defined contributions (DC) pots that you may have accumulated over recent years by working for numerous employers. Do you know where they are ?
• If so how do you draw on those funds, do you buy a simple annuity, where a guaranteed level of income is paid regularly by a pension pension for lifetime or fixed term period. The income is based on pot size, age on accessing, market conditions and health conditions.
• Or do you access on a flexible basis such as Flexible access Drawdown (FAD), where the 1st 25% is tax free and the remaining funds are then taxable by provider and added to any other earnings within the tax year.
• What about a series of lump sums (UFPLS – Uncrystallised Funds Pension Lump Sum), so on each withdrawal 25% is tax-free and 75% is then taxable.
• If you only have a small pot below £ 10K, do you cash in under the small pots rule.
• Do you have income from multiple sources and where do you fit within the UK tax bands. Any income you receive after PCLS is normally added to other earnings and taxed at source by your provider.
• Have you any consideration of ill health provisions, the NHS will provide care to you. But what if you are stuck on a waiting list and need to be seen much quicker, could you afford private health care.
• Do you want to spend your early years in retirement travelling, whilst you are fit and healthily. Do you really want to delay any travel plans to later years, when you may not be so active. Or you may struggle to get adequate travel insurance to cover exotic and far away places.
• On that basis are you going to spend more money in the earlier years than the later years. Have you done some kind of budgeting planning or cash flow forecasts. It generally considered that accessing 4% each year is a safe-option, so the pot doesn’t run out.
• What about long term care costs, it could be very expensive if you are admitted to care. It is something that you have to envisage in the later years, if you suffer ill health, dementia etc.

Remember !

If you found this blog post useful and informative, check out my other posts on https://moneyminted.co.uk, which covers savings, investing, pensions and investing books that I recommend reading. So you can improve your investing and financial knowledge, so you too can reach your investing goals in future.

It’s not a get rich quick scheme, but you will get there in the end if you create an action plan and think long term.