The economic and financial challenges that have characterised 2020 to date are unique and – dare we say it – unprecedented.

We hear that long-established businesses, despite their considerable reputations, have gone to the wall or simply failed to reopen.

Redundancy is a real threat for many, but not just for forward-facing shop, restaurant and bar workers. No corner of industry has been untouched by the spectre of lockdown. Business has faced its own particular contagion, which has attacked and infected sales and productivity, and devastated profitability.

For those down at the coal face redundancy, whether imposed or voluntary, poses not only financial challenges, but significant mental challenges as well.

Even if we are not immediately threatened by financial dire straits, our general wellbeing, lifestyle and security may be more in need of attention than ever before.

A journey, not a destination

One unofficial touchstone of wisdom in the AAB Wealth office is that ‘our financial life cycle is a journey, not a destination.’ Along the way, the road will have ups and downs, but there is one certainty to reassure us: the journey will be safer in the company of a trusted partner who can keep us right by providing essential advice.

In my previous blog post, one of the ‘survival strategies’ I suggested for those who have been made redundant to sit down with your trusted travelling companion – your financial adviser, planner or wealth manager – and review your assets.

A few minutes working with us to ‘take a snapshot’ of where you stand with your mortgage, savings, investments, pension, and debts can be time well spent. Financial experts produce regular reports lamenting the fact that so few people know what assets they own, what they are worth, and where they are invested. So many are simply ‘sleepwalking’ their way into an uncertain, or at least unplanned, financial future.

As an example, let’s zoom in and delve a little deeper into one area where a review can be of great benefit. Let’s look at how you could consolidate and improve your pension situation - with the help of our financial team.

Pension freedoms

Since 2015, anyone aged 55+ can access or ‘draw down’ slices of their pension savings, to live on, reinvest, or spend as they wish. Clearly, this could appear to many to be an attractive option in a redundancy situation. It can buoy you up, secure the financial wellbeing and lifestyle of your family, and give you a breathing space while you search for your next position. 

However, there are limitations on what you can save into your pension in future after having drawn down funds, and so this is where your relationship with us, your trusted travelling companion, really comes into play. Also bear in mind that, while a quarter of what you draw down is tax-free, the rest is treated as taxable income. Good advice will help you understand the implications of drawdown, and help you with a strategy that can avoid large and unexpected tax bills.

Help with charges

We can also help you understand another area where transparency is in short supply: the charges involved in drawdown.

There are many charges applied to drawdown products, they vary from one pension company to the other, and this makes comparing one provider to another quite challenging. The tangle of pensions legislation has become a thicket, but having a trusted partner to help you through can make all the difference.

Perhaps you are beginning to appreciate the value of having an old and trusted friend along on your journey, who can keep you on the safe path, and navigate you through? If you don’t have one, we would of course recommend one of our own.

If you wish to have a no-obligation chat to one of our own trusted advisers, please contact us at advice@aabwealth.uk or 01224625111. We’d love to hear from you.