Later life planning for clients: What IFAs need to consider now

Why later life planning is changing

Understanding the impact of rising care costs

Planning for an open-ended liability

A key consideration is the rising cost and unpredictability of later life care. For many clients, the challenge is not simply whether they can afford care, but how it may affect their overall financial position and longer-term objectives.

With no clear cap on care costs and significant regional variation, care funding remains an open-ended liability¹ ². This makes early, integrated planning essential, particularly where clients want to retain control over the quality and type of care they receive. It's important to remember that the cost of care and funding requirements will vary depending on individual circumstances and may change over time.

Balancing care needs with wealth preservation

The funding of care must be considered in the context of a broader financial plan. Decisions around how to meet potential care costs can have implications for investment strategy, income sustainability and legacy planning. For advisers, this means helping clients weigh immediate priorities against long-term outcomes, ensuring that care needs can be met without compromising wider objectives.

Pensions and retirement readiness

A changing pension landscape

The pension landscape has undergone meaningful change in recent years. The removal of the lifetime allowance has opened up new opportunities for clients to continue building pension wealth without the constraint of a hard cap³.

However, this shift also changes the nature of planning. Advisers must now focus more closely on how and when pension benefits are accessed, rather than simply how much can be accumulated.

The role of pension contributions

Pension contributions continue to play a central role in retirement readiness. For many clients, there are ongoing opportunities to maximise tax-efficient saving, particularly where unused allowances from previous years can be carried forward. This information is based on our current understanding of HMRC tax regulations in the UK. Tax treatment depends on your client’s individual circumstances and may be subject to change in future.

For higher earners, tapered allowances still require careful management. Advisers can add value by ensuring that contributions are structured in a way that supports both current tax efficiency and long-term objectives⁴.

Accessing pension wealth effectively

The way pensions are accessed in retirement is becoming increasingly important. Decisions around timing, sequencing and income levels may reduce income sustainability or increase tax liabilities.

This requires a considered approach that balances income needs with tax efficiency and investment sustainability. For many clients, a flexible income strategy that can adapt over time will be key to supporting a successful retirement.

This article is intended as general commentary and shouldn’t be seen as advice or a recommendation for any individual client.