Affluent retired worried about finances

Well off retired people are worried about both the effects of IHT on their beneficiaries and inflation - but are not prepared to do anything about it, according to wealth manager HFM Columbus.

A recent survey of over 60s in affluent areas of Surrey conducted by the high net worth specialist revealed that although the vast majority own their own homes outright – 86 per cent – most are neither concerned about plummeting house prices nor reckon they need to revise their pension arrangements.

“The financial landscape is changing dramatically right now and it’s going to affect everyone, not just those with mortgages and families to support,” says HFM Columbus director Gary Festa.

“I’m concerned that people who have worked hard all their lives, paid off their mortgage and kept up their pension payments are not going to realise the financial future they were expecting, just through sheer complacency.”

Ever-increasing longevity means today’s older generation is going to be retired for considerably longer than their parents from whom they have inherited their financial views. And with a rapidly rising cost of living, more options for ongoing care and increasingly fragmented families, it’s vital that financial planning is regularly assessed and brought up to date.

“The good news is that the majority have played by the rules and have both savings and investments and private pensions,” says Festa. “But the worrying fact is that most believe they have done their bit and don’t see the need to revise their current arrangements.

Three quarters of those surveyed believe it’s important to pass on their assets to their loved ones when they die and the vast majority – 91% - have made a will to make sure this happens. But more than half are worried that the Government will take a big chunk out of their estate.

“No-one names the taxman as a beneficiary on their will and of course everyone is concerned about that happening, but rules affecting IHT have changed considerably in recent years,” says Festa. “There are now a much wider range of options that can benefit everyone, regardless of the size of their assets.

“The same applies to equity release. This doesn’t need to be a drastic measure anymore. It’s now possible to release a much smaller sum, such as £10,000, that can provide a very comfortable cushion to the cost of living but doesn’t risk the bigger picture.

Interestingly, the survey flagged up the fact that the majority of people surveyed had to ask what was meant by the term “IHT”. They still think of this tax as “death duties”, which could account for a lack of awareness of the options now available to them.

“It is hard to shift entrenched views on the sensitive issue of money but unless this market is given a firm wake-up call, there are going to be some who will lose out,” Festa concludes.