Lowes Magazine Issue 123

PLANNING

ANDREA LEASK PROVIDES SOME general advice that can help retirees manage their finances when inflation and interest rates have been rising month on month. How we help clients

is an option, on the basis that inflation will not remain this high forever. Lowes clients should have a rainy day/emergency fund – could this be used to temporarily top up income – on basis that it is replenished at a later date? Remember, this fund has to step in when there is an emergency, such as to pay unexpected medical or household repair bills, so any withdrawals should be managed with this in mind. Revise: Having reviewed both income and expenditure you can revise your monthly budget. Review your estate planning: Many people want to pass on some of the wealth they have acquired during their lifetime to loved ones and other beneficiaries. Sometimes they can ring-fence this money and determine not to touch it, to their own detriment. We find loved ones would much prefer to see their parent or grandparent with sufficient money to have a decent standard of living than to scrimp unnecessarily on their behalf. Revising your view of your overall assets can identify where If the above have not delivered enough income for your needs, it may be that your investment portfolio can be adjusted to turn on more income. Or putting some of your retirement pot into a fixed-term annuity could provide additional regular income for a set period, with the balance of the money staying invested. This can provide a guaranteed income but with the potential for further investment growth. Revising your portfolio can help in the short-term and be reviewed in due course. Summary: These are just a few general ideas. Currently, with rising inflation and interest rates, we are in for an uncertain situation. And, of course, every individual’s circumstances will be different. So, in all cases other than a review of your expenditure, I would suggest before you take any action that you talk to Lowes. We can assess your circumstances and offer the best advice. changes can help in difficult times. Review your investment portfolio :

With inflation having reached its highest point in more than 30 years, savings and income are being eroded at an alarming rate and at a time when most tax allowances and thresholds have been frozen, adding to the squeeze on household incomes. It is perhaps no surprise that according to data from the Bank of England, UK credit card borrowing in April rose at the fastest rate since 2005. These can be attributed, at least partly, to the rise in the cost-of living, driven by the supply chain issues post the global pandemic and the energy crisis fueled by Russia’s invasion of Ukraine, with disposable incomes falling as a result. For those in retirement who have planned for set levels of income as they move through their retirement years, the effect of rapidly rising inflation and interest rate hikes raising costs (Office for National Statistics May data shows that 61% of businesses increased prices in just one month due to rising costs), can be both immediate and cumulative. They reduce buying power incrementally, which can force a reduction in lifestyle quality or require larger sums than expected to be drawn down as income from retirement savings. So, what can be done to help? Review and revise are the key words I suggest here. Review your expenditure : It may seem an obvious thing to do, to review what we are spending and this is usually our first port of call. But often biases can creep in when it comes to our lifestyles and what we are prepared to give up or think is essential. We can become set in our ways. Have someone else, an independent eye, assess your outgoings as to what is truly needed – could you take fewer holidays or weekends away, or reduce your theatre trips or regular

meals out for a while? Review your income:

If you are able to vary your income, a review of what impact drawing down more money now will have on your future income will give you a better idea of whether increasing your income now

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