Fortysomething: Family financial planning for the short, medium and long-term

Family financial planning for the short, medium and long-term

Why did Anna and Steve want independent financial advice?

Anna is 41 and Steve 42.

Anna had recently returned to work following a period of maternity leave and, having become used to living on one salary, they were now keen to make the most of their increased household income.

They contacted us after being recommended to us by a family friend who was also a client of ours.

Over the past few years, as they focused on raising their two children, their personal finances had become something of a mess. They were settled in the house they had bought some years ago and had no plans to move. However, almost every other aspect of their finances needed some attention.

How did we help?

We spent a couple of meetings getting to know Anna and Steve, during which we identified three key goals.

Firstly, they wanted to know that should either of them die, or become seriously ill, while the children were still dependent on them, the family finances would be secured.

Secondly, they wanted to start putting some money aside each month which could be used in the future by their children. Their parents helped them buy their first house and Anna and Steve were keen to do the same.

Finally, they wanted to make sure that their retirement plans were on track. Although, being so far in the future, this was the least important of their financial priorities.

Fortunately, we were able to help and drew up a financial plan to address each of these concerns.

To begin with we analysed the benefits package that both Anna and Steve got at work. We found that both had death in service cover which would pay out a lump sum if either of them died. While on paper it sounded like a lot of money, in reality, it wouldn’t have lasted long. We therefore calculated how much the other would need in the event of their deaths and recommended a Life Cover policy to top up what they would get from work.

We also noticed that their mortgage was not protected in the event of death or illness. This was a serious oversight and would have left the family hugely exposed had one of them died. We therefore recommended a policy which would repay the mortgage if either of them died or suffered a serious illness.

Then, we recommended that they make a will, to ensure their wishes were carried out should they die. The fact they have young children made this a priority and they both agreed to meet with the solicitor we recommended so they could get that important job ticked off their financial to-do list.

Next, the children.

Anna and Steve believed they would be saving for at least 15 years. We therefore recommended they contribute each month into a Stocks & Shares ISA (Individual Savings Account) to build up a lump sum of money for the children to use in the future.

We also helped Anna apply for the Married Couples Allowance, which they qualified for because of her relatively modest earnings. This saved them a few hundred pounds in tax and, because she wasn’t working last year, could be backdated.

Finally, we analysed their pensions and, using our financial forecasting software, explained to Anna and Steve what they would be worth by their mid-60s when they planned to retire. They were broadly comfortable with the result and didn’t feel they needed to contribute anything further at this stage. However, we agreed to continue monitoring the situations.

How have Anna and Steve benefited from taking financial advice?

Their finances are now far more secure than before we met.

If one of them dies, or becomes seriously ill, their family’s financial future is secure. That was a great relief for Anna and Steve who were worried about what would happen, but like most people had not got around to addressing the problem.

The children will now have a nest egg to draw upon when it’s needed and Anna and Steve’s retirement plans are on-track too.

We agreed that we would meet with Anna and Steve once a year to review their circumstances and make sure their plans are still on track.

Please note all case studies are fictional and for illustrative purposes only.

Please remember:

The value of pension and investments and the income they produce can fall as well as rise.

You may get back less than you invested.

The Financial Conduct Authority does not regulate Tax Planning.

Request a callback

We'd love to hear from you, either call us on 07742 107851 or complete the form below