Planning for change - allowing for changing financial goals

You, or a loved one, may experience a life-changing event. Your health could deteriorate, your previously financially independent children may need monetary support, or you may wish to change your retirement date. Whatever the situation, it is possible to adjust your plan and give you clarity and comfort when showing you what this could look like.

Some people who have a financial planner are extremely proactive in keeping them up to date with their plans and will pick up the phone to explain their situation. For example, they may have initially decided to retire within the next six months, but due to a change of circumstances in their company, they have decided to keep working for another year.

Others will share this sort of information only at a review meeting, even when the retirement date that we previously planned for has already passed.

Generally speaking, the earlier a financial planner knows about a change to your circumstances and goals, the better the potential outcome will be for you. This is especially important given the number of changes we expect to see in the upcoming Budget.

If you are aware of any potential changes to your own position, please speak to one of our financial planners now so that you don’t lose out on opportunities that may not be available to you for much longer.

At Evelyn Partners, when your financial plan is first established, a cashflow modelling exercise may be undertaken to help forecast your financial future. A cashflow model can show how much you need for your financial goals and objectives. 

While cashflow modelling is excellent for planned life events (like retirement) it cannot predict those that come completely out of the blue. However, as part of an ongoing relationship, we can run a new cashflow model to show you how this change can be accounted for. 

There might be adjustments required in other areas to allow for this but we can show you where best to make these in order to secure the most suitable outcome.

Your annual review is often a good time to look at a cashflow model, but it can be created at any time. Going through a life-changing event that alters your long-term goals is a great time to speak to our financial planners about creating a new model. 

These examples are for illustrative purposes only and are not recommendations. They are not based on a specific client case. Any similarities are purely coincidental.

Colin is 59 years old. He retired two years ago. Unexpectedly, his daughter divorced her husband of five years.

He called his financial planner to explain the situation and said that he would like to give his daughter anywhere between £50,000 - £100,000 to help pay towards her solicitor’s fees and a new house once the sale of the former marital home is complete.

Colin’s financial planner re-ran a cashflow plan to show that it was possible for him to take the money from his investment portfolio while still fulfilling his own financial goals. He would need to keep this under review each year with his financial planner to ensure his long-term needs would continue to be met.

May is 60 years old and is currently self-employed. She initially planned to retire at the age of 62. Her grandson started high school last year but struggled academically due to the size of the classes. 

She spoke to her financial planner as she wanted to see if she could afford to pay for him to attend a private school, as his parents were not in a position to pay for the fees themselves.

May had plans to go on a luxury Caribbean cruise with her husband, John, for her 65th birthday and was understandably not prepared to sacrifice this in order to pay towards the fees.

After looking at a new cashflow plan which took into account the fees as well as her trip, the forecast showed that May would be able to fund her grandson’s education until he is 18 if she kept working for an additional year. This allowed for average fee increases along with the 20% VAT which will be added to them under the new Labour government. 

May was happy with this solution. She felt comfortable as she had clarity of her full financial situation and knew that she could achieve her new objective by working for slightly longer than anticipated. 

Peter and Victoria are both 48. Peter works full-time while Victoria works part-time. Victoria was told that she required a knee replacement and that the waiting list to receive this on the NHS was 18 months.

Victoria’s injured knee was having a significant impact on the quality of her life as she could not sleep due to the pain, struggled to get up and down the stairs and was not able to carry out her usual day-to-day activities. The only solution to get the operation done quickly was to pay for it privately at a cost of £15,000.

Peter contacted their financial planner to discuss where they should take this money from and what impact it would have on their long-term plans. They both planned to retire in 10 years.

The financial planner suggested that the money should be withdrawn from their cash emergency fund. This could then be topped up over the following six months by drawing on their investment portfolio. The cashflow model demonstrated that it was affordable to pay for the treatment without impacting their retirement plans.

Although it’s impossible to account for every impactful event that could happen to you or your loved ones, it is possible to include some contingencies within your initial plan.

Catastrophic health events
Your financial planner can show you what could happen to your money and financial security if you suffered a critical illness or accident. From this, they can recommend the appropriate level of insurance to make sure that your family’s long-term financial stability isn’t compromised should the worst happen.

Long-term care
Even if you are nowhere near the age where people usually require care, it is worth considering how you would afford to pay for this, especially as the new government have announced that the Conservatives adult social care cap (which was due to be implemented in October 2025), is no longer going ahead¹.

The cashflow plan can show if you could afford to pay for the cost of care from your existing funds, or if you need to purchase a long-term care plan. Your financial planner will go through your options in detail.

Market crashes
A crash in the financial markets is not a financial goal but it’s certainly something to take into account in your plan. When establishing your initial plan, we stress test it to assess if you would still be financially comfortable if the markets dropped, and if not, what can be done to allow for this.

Changing your plans or goals isn’t always going to lead to a financial drain. In fact, in some circumstances, the alteration could be financially beneficial.  

For example, many clients in the early stages of their retirement want to travel. They want to take longer haul trips that they simply did not have the time to do when they were working. These holidays are factored into their financial plan.

While they may want to take, say, 10 trips, in reality, they often only go on two or three of them. This could be for a number of reasons. As they become older, they may not be fit and well enough to do it, or in some cases, the long flights and time differences become unappealing and instead they decide to holiday in Europe. In many cases, this can be far less expensive, leaving them with more money than they initially planned for.

Typically, we see that people tend to spend more money in the first 10 years of their retirement. After this, spending patterns tend to naturally reduce.

If your change of plans is likely to leave you better off, it’s worth speaking to a financial planner about how to make this additional amount work harder for you - although you should bear in mind when investing that there is a degree of risk and you may not get back the amount invested. At Evelyn Partners, we offer combined wealth management. Your financial planner can introduce you to one of our in-house investment managers and they will then work together to ensure that your overall plan and portfolio always reflect your individual needs as your life and priorities change.

Your initial financial plan is there to act as a ‘roadmap’ to keep you on the right financial track. But it’s important to remember that it is not set in stone. Each year, your financial planner will review it, make amendments where appropriate and make sure it reflects your life, circumstances and priorities at that time.

For more information on how we can help in times of change, please speak to your usual Evelyn Partners contact, book an appointment online or call us on 020 7189 2400.

Source:

¹ Community Care, Government scraps cap on care costs to help tackle spending ‘black hole’ , 29 July 2024