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Personal financial masterplan: What age is too early?

Talking with your financial advisor and consulting financial planning tools can be very helpful in planning for your retirement, writes Mr Paul Redmond

If 2020 has taught us anything following the pandemic, which has engulfed the glove, it is that we do not know what is destined for us down the tracks.
Who would ever have thought this time last year that we would face into a new decade having to cease all our social outings, cancel our longed for summer holidays and not celebrate birthdays, weddings etc.

Most of us think upon financial planning as an area to discuss and examine closely as we approach retirement. We have been saving into our pensions since we started working full time, most of us assume there are adequate funds there to support an active lifestyle when we decide to retire.
What if we were to look at our personal financial planning at an earlier point in our lives? Younger medical professionals quite often have a complex set of planning needs. As they embark on life after so many years in education, their goals are the same as any professional. Life events happen such as marriage, children are born, homes and mortgages are needed or possibly a chance to become a partner in a GP practice.

When was the last time you sat with your financial advisor and discussed these needs? When was a masterplan of your personal finances carried out and presented to you? If or when these events come your way, is there a full financial plan in place with your advisor that can help with these decisions?
To create a personal financial masterplan that will sustain your present and future goals and spending, it is advised that you consult a financial planner with knowledge in areas such as: Life assurance; serious illness; income protection; and, of course, pensions. These products are constantly reviewed by Life companies and it is not always the cheapest options that will work.

The devil is in the detail with these products and once in place, they have you and your family fully covered. Financial planning tools can examine what happens when you retire. You assume that as you are saving into a pension for your working career that you will have the funds there to retire comfortably. Have you asked yourself what sort of retirement you want to live. Will it be a time for travel, will your current home be unsuitable when the children have flown the nest? Would you want to downsize, perhaps buy a rental property as an income stream?

If there is a share in a practice, what will happen to that? Will it be passed on to your next generation? Is there a succession plan in place? Another area that is important to parents is their children’s education. With the majority of students looking to go on to third level education, whilst an excellent decision, it can be a costly one for parents. Will there be a time where possibly siblings may go at the same time, how do we plan for that? Is the plan to have the mortgage paid off by then to release the funds for university? Can you afford to do that?

There are some excellent tools available from financial planners but for them to work effectively, a certain amount of commitment is needed from you to both gather the information and get from this what you need. A good place to start is with your last six months bank statements. These can unveil a lot of information that you might not be aware of in terms of understanding what areas you spend your income on. Another excellent source of gathering the information can be found in a fact find template from your advisor, these cover all areas in terms of income, savings, pensions, spending etc.

The process can take several meetings with your planner to ensure that it reflects your lifestyle, your goals, your spending and is realistic. Be as honest as you can be, this is the time to ask yourself am I financially safe?
Create the relationship with your financial planner. Ideally, you should be referring to this plan annually. Over time, circumstances change in everybody’s lives, some good, some not so good. The value of an ongoing relationship with your advisor is key to making this masterplan work for you.

Financial planners take great satisfaction in carrying out these plans for professionals and working with them to implement a plan that benefits them and their families. Take the time to gather the information, however time consuming it may be. The final result will be invaluable and help to build your future.

Mr Paul Redmond (CPA,QFA, FAIA) is Managing Partner of RDA Accountants Limited. He is a member of the Institute of Certified Public Accountants. He is also a Fellow of the Association of International Accountants and a qualified financial advisor

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