Stage 2:

Achieving and maintaining Financial Freedom

Once the strategies for building wealth have been identified and implemented we need to proactively review the plan on a regular basis to ensure that you remain on target. As you approach the point in your life where you finally have sufficient assets to re-create your income requirements without having to continue working, the next stage is to ensure that, as much as possible, these assets and income are protected. While the wealth accumulating stage is an investment growth phase this next stage requires a different approach.

As you move closer to your Financial Freedom target date your exposure to the more volatile high growth assets should be gradually reduced. Once you reach your financial target then our job as professional advisers is to help preserve your asset base against the real threats of inflation, high taxes and unreasonable volatility/losses in your asset base through appropriate asset diversification. This stage in the financial lifecycle is about providing sufficient long term regular income while preserving your capital asset base as much as possible through a conservative yet realistic investment strategy.

In some cases this stage in the financial lifecycle sees a drop in overall capital outgoings as the children no longer tend be financially dependent on parents and there may be little or no mortgage remaining on the family home. However, this is not always the case and other risks and unforeseen expenses can often present themselves.

Risks and challenges that need to be considered and addressed during this stage include the following:

  • Is your asset base generating sufficient income to maintain your desired lifestyle (lifestyles can change) as well as continue to generate enough cash flow into the future?
  • Is your overall asset base protected sufficiently from high volatility through diversification and through an appropriate level of non/low-correlated investments?
  • Are your pension retirement structures established in the most tax efficient manner so as to ensure that you are not paying more tax than you need to be when drawing down income?
  • Is your overall asset base structured in such a way as to minimise taxes on your income and capital base?
  • Have you considered the potential costs of future health care as well as possible nursing home provision?
  • Have you potential dependent parents or other relatives that may need financial help from you at some point and what impact this might have on your own financial well-being?

Once you have achieved Financial Freedom our expertise and on-going advice allows you to reap the maximum benefits in retirement. We can help you deal with the above issues and others, which can be complex and stressful, in a professional and coherent manner.