The flow of wealth from baby boomers to the generations that follow is well underway.
Labelled the “Great Wealth Transfer”, FTAdviser reported back in 2021 that an anticipated £5.5 trillion will pass to millennials and Generation X in the next three decades.
Highlighting the need for comprehensive and tax-efficient estate planning, the huge amounts involved also beg another question.
When is the right time to seek financial advice and can it ever be too soon?
Keep reading to find out.
Starting early gives you the best chance of reaching your financial goals
Simply put, the earlier you start saving for the future, the better.
The pension contribution rule of thumb states that you should take your age, half it, and put that percentage of your income aside each month.
Start investing into a pension at 30 and you’ll need to find 15% a month. Wait until you’re 50, though, and that amount jumps to 25%.
Your pension is a long-term investment. The longer it has to grow, the more chance there is of you seeing significant investment returns, and the longer you have to take advantage of compound growth.
Compounding is effectively interest on interest, and its effects can snowball over time, making a huge difference to the size of your pension pot at retirement.
If you have children or grandchildren entering employment for the first time, be sure to pass on these key lessons:
- Contribute to your workplace pension as soon as you can and increase your contribution if you can afford to. The increase might even be matched by your employer.
- Pay your future self first, by saving and investing on payday, and then budgeting for the rest of the month with the money that is left.
- If you receive a pay rise or bonus, invest some or all of this too, before you miss the additional amount.
Financial advice becomes increasingly important at certain life milestones
Auto-enrolment has made it easier than ever to start saving for your future, but certain life milestones might require additional, expert advice.
If you have witnessed first-hand the value of working with Fingerprint Financial Planning, you will likely want the same for your loved ones.
If your children or grandchildren are looking to get on the property ladder, or they are about to receive a large inheritance, financial advice is vital.
A large sum of money comes with added pressure, as the tax consequences and long-term ramifications of a bad decision can be huge. Your beneficiary will need to think about:
- The benefits of doing nothing, at least in the short term. Rushed decisions are often bad decisions so taking the time to seek professional advice is crucial.
- Managing a small investment will be different to handling a large lump sum, or even a house, so understanding different asset types is key. Financial advice can help with this.
- Clearing high-interest debt is often a good priority but the right way to deal with an inheritance will be individual to your inheritor.
- Talking to an adviser is a great opportunity to assess priorities and begin to work out a long-term financial plan.
- Inheriting a large sum might mean that your inheritor needs to think about their own legacy, maybe for the first time. Protection and estate planning can begin early too and could be as simple as putting a will in place.
Starting early is great but it’s never too late to start
There is no exact age at which you should start working with a financial adviser. Like your fingerprint, your circumstances are individual to you and your plan will be too.
While starting early gives you the best chance of achieving your goals, it might be a life milestone or a sudden inheritance that triggers the need for advice.
Even once you finish work and begin drawing a pension, the difficult financial decisions don’t stop.
Managing retirement income and estate planning while ensuring you retain enough money to cover the unexpected, like later-life care, means that the professional advice we offer at Fingerprint can take you from the cradle to the grave. We can do the same for your loved ones too, whatever their age and long-term aspirations.
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The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. Workplace pensions are regulated by The Pension Regulator.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.