I received a circular from Standard Life this morning in the email, offering advice on “How to pass on your pension to your loved ones”. This, I thought, was a bit previous as I have no intention of dying anytime soon, although I grudgingly admit that at some point it may have to happen. Like Woody Allen, however, I don’t intend to be there when it does.
One of the main tips in the article was to remember to regularly review your will. My wife and I made our first will about twenty five years ago when we took out a new mortgage. I think, at the time, that we giggled our way through it at the strangeness of it all, laughing in the distant face of our assumed unlikely deaths. Oh to be young again. When we recently updated it, we weren’t quite so jocular and it seemed quite a serious exercise, simultaneously quite simple and complex as you work through various scenarios. These brought up the question of also making a Power of Attorney, which we resolved to do (and still haven’t.)
Another document we were handed to complete prepared you for things that you might like to happen upon your death – including such things as what music you’d like played at your funeral – in a Statement of Wishes. Filling that out is also still on the “To Do” list. It’s one of these things that you know you should focus some attention on but somehow find yourself not getting round to it.
I also admit that I have very little knowledge on the financial side of the death equation. I’m aware of very general points of inheritance tax – such as that it exists – but have not looked in any detail whatsoever at the subject. I’m probably telling myself that I’ve got years, nay decades, to look into all of that. Another general thing I tend to think of is the scenario that I’ll go first, leave everything to my wife, and then she can sort it all out. (That actually happened to a friend who had his own business, with disastrous results.)
I am aware of the importance of “putting your affairs in order” on a hypothetical basis at least, as I bet many of us are. Actually “putting our affairs in order”l takes a bit of work and might not seem the most appealing thing to do, but at some point will need to be done. It also seems obvious that this should happen while you’re still in sound mind to do it. It surprised me, when I sat down to review the contents of our first will, that we immediately wanted to change a few things in it. I had kind of assumed we’d just be rubber stamping things that we’d previously requested, but it didn’t turn out that way. There were no drastic changes, but the exercise caused us to think things through that, decades ago, had seemed straightforward. Bottom line was that over the years your circumstances change, but so do your attitudes toward them.
In the end it’s the reality of the Grim Reaper that stands behind many of the decisions that we make today. For starters, at what point do you end your spreadsheet modelling for retirement? Does it just kind of fade away as you approach your nineties? Or have you had a stab at filling out one of those on-line calculators that give you an actuarial Estimated Departure Time? For me, it’s one of the big unanswerable questions that frustrates when trying to work out your pension plans – how long do you need your funds to last? Should you spend more in your Sixties than you plan to in your Eighties? The answer to that would seem an obvious “Yes”, leading to the next question of “How much more”? It’s all very well planning to “Die With Zero” only to find that you actually have to “Live With Zero” because you got some assumptions wrong. (I’m sure that book tackled this issue and gave you some strategies for it. But, as I’ve mentioned, hypothesising is easy.)
And so, at last, I’ve managed to write a blog entry about Death! Only Sex to go, and I will have finally delivered on the promise of my title.
sex health money death 
All good thoughts. Glad you are paying attention to it. Should be done at any age especially to ensure you make the transition as smooth as possible for survivors.
One big thing married couples miss is credit cards. Usually only one spouse is the primary on the card even if the spouse has their own card. When the primary holder dies the card cannot legally be used anymore. So be sure each spouse has credit cards in their own name. More than one is best. Most people don’t know this.
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Cheers Bob, add me to the list, I didn’t know that either. There are probably loads of little things like that, not publicised because we have a problem with facing up to our own demise.
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Inheritance tax is well worth looking into. HMRC is waiting in the wings. Death and taxes, goes together like rhubarb and custard.
I’m looking into giving the kids their inheritance or at least part of it before I snuff it. I think it’s seven years from giving until it’s tax free.
Every days an adventure. Tomorrow is never promised. Stick two fingers up at convention and get on enjoying it.
When you finally get on to the Sex part would you mind showing me a map on how to find the G spot?
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Hi Linton I had heard about that seven year rule and my first response was “They’ll soon change that”. I think I first heard about it when David Cameron and his family took advantage of it. So far it’s not been touched and the politicians don’t like upsetting the Oldies, but we live in interesting times.
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Thanks for the reminder to review the will. Like you I’ve been putting it off for years. Now on the to-do list. I’ve always considered a “Statement of Wishes” as “I don’t care as I will not be there” but now think that’s not being very helpful to those left to organise things.
A couple of years ago the penny dropped for me with regards reduced spend as you age. All I can do is try to to have enough till we both die and not pay too much tax. Until then I thought people leave a huge (relative to how they lived) amounts were financially uneducated. But now realise there is no easy answer and if you get it wrong, money can quickly mount up or disappear.
The one area I’ve been thinking about is passing on pensions. I don’t see this discussed much but I see it as a potentially big advantage for SIPPs. It changes your mind about investment strategies when we don’t just think of yourself.
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I’ve thought a lot about withdrawal rates – safe and otherwise – but haven’t reached any conclusions. Unfortunately because of that I feel I’m drifting, not taking decisions. I know a couple of seventy year olds who are now spending like bandits and having a great time. I wonder if that’s down to a realisation that you can’t take it with you.
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FWIW the way I came to my annual expenses (same as withdrawal rate to me once income tax is included) was to simply 1. take last 12 month spend
2. Break down spend into categories
3. See if that is realistic (adjust if not)
4. Assume a reasonable rate for inflation (I didn’t budget for current situation but assume it will level out over time).
5. Use the above to create a forward view of requirements.
6. Monitor and adjust on an annual basis
The thing for me is to be comfortable that the above will never be 100% accurate, and have a bit of a buffer just in case. But at least I have a benchmark and can tweak as time goes on.
COVID lockdown was the big wake-up for me as I realised we are happy with a simple life and didn’t need to live like we did in the past. Previously it was a simple xx% of salary as our requirements..
Based on personal experience of friends and family, I see people’s capacity to spend significantly decrease once they get past 75. Not wanting to travel far, not wanting to go out much in the evening, appetite greatly reduced, downsized house, etc. Previously I had modelled the same spend throughout life.
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i’m tempted to see 75 as a watershed target, assuming I get there! My personal experience would tend to back up your observations too, and I might spend some time looking at what we’d like to do up until that age and then, after it, let it be….
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Thanks for reminding me that I need to get a will sorted.
My spreadsheets model up to age 100 (for ease only) and I haven’t accounted for decreased spending as I age. The reality is of course that I will spend more earlier on in my retirement but how to work out how much more? I can see me being initially cautious and then perhaps spending like one of those 70 year olds you mention!
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Yes, I do the sums over and over, tell myself I should be spending more now, and immediately start looking at where I can tighten my belt.
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I’ve been an executor of 4 wills – of varying complexity and time since they were made – in the last few years. It’s not a pleasant, or easy, task, and it’s fair to say there are always difficult decisions to make, and a lot of other relatives with opinions. In the worst case – a very old will, made to a template as part of ‘Make a Will month’ – everything was out of date, and the remaining siblings no longer speak, as a result of the wrangling it caused.
Not only is it the only way you can ensure your wishes are carried out, but also having a clear, up to date will (and discussing it with your executors) can make the burden a lot lighter on those who are left behind.
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There was a TV programme where a “Troubleshooter” tried to help families construct wills. It was an education watching it. Even when it was a “straightforward” single family, there were often fireworks and fall outs amongst parents and siblings as they tried to put a will in place. Where there was a second marriage and second families involved it could be even more difficult, and maybe this is why a lot of people find reasons not to do it.
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I remember going to make our first Will shortly after we married. My wife had a child from a previous relationship. The solicitor explained that, if all 3 of us died together, and we didn’t have wills, under intestacy laws my wife’s ex would get everything! We couldn’t sign quickly enough!!
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I was told something similar. If we didn’t have wills, and both we and our son died together, everything would go to my wife’s family and nothing to my own.
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You’ve gone dark again. Let me guess, you went back to work again? 😉 😉 😛
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Hi Codefreeze, no, haven’t taken that road (yet!). To be honest, I’m struggling a bit with what to write about that might be of interest of what (I feel) is a bit of a standard retired MOR lifestyle. I will try to get back to it 🙂
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I guess that was always what I liked about your blog – casual commentary on a MOR retired lifestyle. 🙂
Topic I’ve recently been giving some thought to – how do you handle capital expenses e.g. new car purchase and so on?
Obviously this falls outside the usual FIRE 25 x annual expenses calculation. I’m thinking I need a “capital fund”, and it needs to be topped up too. I’m thinking 50k fund, and £2,400 per year top up, but this is all “finger in the wind” – I’ve no idea really.
How do you (and others feel free to pitch in) handle these big one-off, occasional capital expenses.
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Hmmm. interesting that you ask Codefreeze, because I’m kind of struggling with that question myself. My previous answer, if I suddenly needed to find £20k, would probably have been, “I’ll just take it from my pension pot”, but that could be severely tax inefficient! So my answer today is an honest “I don’t quite know”, but I’m working on it!
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Yes, there’s the tax hit if you did that, and I think this is where the ISA can prove very useful.
There’s also the issue: would taking that 20k mess up carefully crafted 4% rule calculations?
I’m thinking along the lines that I’d need to think ahead of likely capital purchases, and how much. I’d then need to make sure all of this is costed up, and that amount put in an ISA **in addition to my FI number**. That last bit is really the critical bit.
I guess you could allow for this sort of thing when you calculate your annual expenses (for your 25x calculation), but I wonder how many do? For example, if your expenses were roughly 6k a year, but you allowed 12k when you calculated your FIRE number, that gives wiggle room for capital expenses, as in theory that extra money would build up (in the ISA, or similar) over time.
Interested to see what others do…
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