Trustnet Magazine Issue 21 September 2016 | Page 7

/ YOUR PENSION POT /

the things he had not been able to
do before.”
“He felt he had the controlling
hand because it had been his
pension, investments and savings
and she had never had any income,”
said Mealing. “However, as far as the
wife was concerned, the agreement
was that she would be the
homemaker and give up her ability
to earn and so expected a greater say
in how it was to be spent.”

WHEN ONE BECOMES TWO

This may seem like an abstract
concept, but divorce rates have
increased rapidly among the baby
boomer generation as partners
realise they are growing apart and
may have different aspirations.
This can place women at a
distinct disadvantage as they
often have limited savings of their
own. However, both partners will
suffer if the retirement planning
has to be unwound to make
provision for two individuals and
it becomes even more expensive if
the split occurs after the purchase
of an annuity.
While the secondary annuity
market will offer a degree of
flexibility to those wishing to
sell a product, it will come at a
considerable cost.
Prevention is always better than
cure and regular planning provides
greater savings potential for the
partner with a low income.
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Divorce rates
have increased
rapidly
among baby
boomers
as partners
realise they are
growing apart
“This doesn’t have to be about
equalising levels of savings,” says
Mealing, “but is about taking
advantage of all the tax breaks
available and is certainly better
than transferring assets between
couples at the point of retirement.”

KNOW YOUR OWN MIND

Perhaps the most crucial decision
overlooked by those entering
retirement is not how to access
their income, but their ability to
make financial decisions in the
future.
Robertson has a client in his
nineties who still sits on a board
and is “tack-sharp”, but he is the
exception to the rule and there
can be a considerable reduction in
mental capacity by the age of 70.
“At retirement – and certainly
before it is required – is the

point where you should have
a conversation about creating
a lasting power of attorney,” he
explained.
“Thankfully, we seem to be
moving away from the British
reserve that doesn’t involve the
family in financial affairs, but it is
important to do it before it is too
late, so include it in your retirement
planning.”

THE FINAL SOLUTION

Even if you don’t choose a one-stop
retirement income in the purchase
of an annuity – and fewer will in
the future – keeping abreast of your
requirements is essential.
If the kids don’t want or need a
bequest, investment may become
more of a holding pattern, with a
depletion model the most effective
route to draw income.
With time, annuities become
better value and may be more
appealing if you don’t wish to be
bothered with making financial
decisions – or worrying about their
potential outcome.
These decisions may seem far off,
but so did retirement itself, once.
“The most important thing to
remember is there is no default
solution,” said McPhail. “Finding
the best outcome requires that you
plan in advance.”
So, consider all opportunities,
reject none out of hand and
regularly review your journey.
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