Now is the right time to start planning to ensure that the longest holiday of your life is as long and as happy as possible by being adequately funded.
Once the planning process has been started the vast majority of our clients retire on an income sufficient or more than adequate to enjoy a meaningful retirement.
What if I don’t have a plan to date?
You may also be aware that over the years you have not always paid enough attention to financial planning. Financial plans are a little like diets, they tend to start next week or next year, but sometimes next year is a long time coming. If all this rings a bell with you don’t beat yourself up, surprising as it may seem, dentists that have no financial plan whatsoever certainly outnumber those that do.
On that basis it is best to forget about the past, now is the right time to start planning to ensure that the longest holiday of your life is as long and as happy as possible by being adequately funded.
How can we help?
With some very clever software, we can analyse all of the following:
- Superannuation benefits (Hesketh House can provide an up to date projection on request).
- Existing personal pension arrangements (these are often languishing in expensive old-style managed pension funds and can easily be rearranged)
- Practice Freehold where this is available (commercial property provides an above average return on capital which can be very useful in augmenting retirement income)
- Practice goodwill, fixtures and fittings (it’s important to optimise the value of the practice and this can be achieved by obtaining an up-to-date valuation, looking at the areas that could increase value or viability to attract a potential buyer).
- Value of your home and potential for generating income or downsizing whichever is appropriate (in our view selling and downsizing at point of retirement is an absolute last resort and we usually managed to arrange for our clients to retire in the home they have come to love over so many years).
- Existing savings and investments and how these might be utilised effectively to produce income.
- Potential inheritance
- Tax planning
Establishing your financial needs in retirement
The above forms a list of the main areas where we are likely to be able to improve things. An important part of the planning process of course is to establish your actual financial needs in retirement.
This can usually be done quite effectively by looking at your current domestic expense arrangements and considering carefully which items will continue into retirement and at what level.
At this point we have a very clear idea of your current financial picture and where there is a shortfall we can start to build a plan. As previously mentioned we need to optimise the potential sale value of the practice and there are a number of ways this can be achieved not all of which are obvious.
We need to make the very best of your current savings and investments and we definitely need to optimise savings that can be enhanced by the Inland Revenue.
It’s incredible to think of how much tax dentists pay, a great deal of which could be clawed back with appropriate investment. It’s also amazing to see what can be achieved once a definite figure to retire at a specific date has been established.
If you have worked in the NHS
If you have remained working within the NHS it is likely that you will have substantial superannuation benefits and an appreciable tax-free lump sum, but it is also likely that this will not be the whole story in that you may wish to achieve more in retirement than the superannuation alone will provide.
Consider all the options
Another way to transition into retirement is to gradually reduce your workload. For some this could mean selling the practice and working on in the practice as an associate (assuming of course the purchaser and yourself are an agreement). This could be a 2 to 4 year period over which ideally you are able to gradually reduce your hours.
A typical pattern for many of our clients will be a very active two years immediately post retirement which could well involve a great deal of travel and the purchase of capital items (boats, holiday homes, motorhomes, caravans etc) that can add a great deal to the whole retirement experience.
Unfortunately, all of this requires capital and if no planning has taken place it is entirely likely that all available cash will be taken up in the pursuit of income. This is not the greatest start to retirement and adequate planning ahead of time can mean there will be sufficient funds available to make your retirement more meaningful.