Protecting your wealth and financial planning in retirement

Protecting your wealth and financial planning in retirement

Wealth management means different things at different times of life. A young couple aiming to build wealth will have a very different management process than a retired couple.

For any individual or for a couple (we will refer to couples for simplicity, but the principles apply equally) it is important to constantly review their financial planning strategy and their wealth management in light of where they are in the various life stages.

It is this shift in emphasis which is important and for the majority of people in retirement the focus will move towards protecting their wealth.

Protecting Your Wealth

This protection essentially falls into two main categories, which overlap. One is protecting the hard earned asset values accumulated during the working lifetime; the other is protecting the couple’s income and lifestyle throughout retirement.

One further aspect that is sometimes overlooked in considering all of this, is that the wealth accumulated rarely disappears (although there may be some exceptions to this) – more often than not it is passed down to beneficiaries. So the concept of protecting the wealth extends beyond the lifetime of the couple.

Effective Financial Planning

Therefore to instigate a successful and effective financial planning strategy, retired couples need to balance out three considerations or questions:

  1. How do we protect what wealth we have?
  2. How do we ensure that we protect our own positions (especially our income requirement) through our retired years?
  3. How do we effectively pass the wealth through to the next generation?

At first glance it may be assumed that the first two questions ask the same thing. They do not; as a simple example to evidence this, consider a couple who enter retirement with a significant sum of money in a pension. In considering how to protect their wealth they may not want to lose the capital sum within the pension fund. They may see this as a sum that can be kept, not just for their own lifetimes but as an inheritance.

However they need to provide income for themselves and may wish to guarantee (as far as they can) the income throughout the rest of their lives (which could be many decades). In this respect they may consider securing their position through the purchase of an annuity. However, this is potentially a sacrifice of the wealth created – currently held in the pension.

Meeting one requirement may jeopardise the other.

This is why the key considerations have to be balanced. It is striking the right balance which is the cornerstone to getting a successful outcome.

Key Considerations

Wealth protection is often cited as one of the most important (and quite often as the most important) needs couples have with their money. This is not just a practical consideration. Many people consider that having earned and accumulated their wealth through their lifetime, they want to preserve it. Understandably so. There is a feeling of fairness “We’ve worked hard for this, we don’t want it squandered”.

This is (partly) why any effective wealth protection strategy should include a strong regard for the threat of care costs because, probably more than other aspect, this is the one thing that can ravage wealth in retirement.


Protecting wealth in retirement is a multi-faceted task: there is no one easy way to protect one’s wealth. Even those people who have more money than they can ever spend need to consider how to keep the tax burden under control (including Inheritance Tax), how to invest appropriately and avoid catastrophic investment losses (think Bernie Madoff), how to protect their estates from unruly beneficiaries or a divorced child’s ex-spouse.

Arguably the retirement years present some of the most challenging financial planning considerations.

Today’s retirees can rejoice in the improved prospects for a long and healthy retirement; however the ‘price’ is that this requires careful and skilled planning to get the financial position just right. Specialist advice is key!

This article was written by Penguin Wealth