The Game of Life – financial planning for a game of two halves

Financial planning can be thought of as a game of two halves. During our 20’s, 30’s and 40’s, we are making our way in life. We borrow and buy a house, we start long-term relationships and have a family. We make pension contributions and pave the way for the second half where in our 50’s, 60’s and 70’s, we enjoy the fruits of our labours. The mortgage is paid off, kids are through university and we have sufficient pension income to retire. The second half requires a good first half as a death or long-term illness will affect how much we have to live on. Similarly, lack of pension provision during the first will not give the rewards in the second.

So, for the first half we should ensure that all mortgages and liabilities are repaid in the event of death or a critical illness. Therefore, there are no loan repayments that can’t be met. We should provide all beneficiaries with the means by which to live comfortably as the loss of a main wage earner can be devastating. We should keep the income being paid even if this main wage earner is unable to continue working due to illness. We should also plan our retirement and make sufficient contributions towards the second half as affordability allows. Hence protection policies such as life cover, critical illness cover, and income protection are needed alongside the selection of a suitable pension policy.

For the second half, when the first half protection worries have subsided, we can focus on savings, larger pension contributions and planning for a date when we are self-sufficient and can live comfortably without the need to work, unless we want to. None of this happens by chance. Professional planning for both halves is essential.

If you would like to discuss planning for your “two halves” please contact Terry Burgum, Financial Planner at Kreston Reeves Financial Planning here or on +44 (0)330 124 1399.

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