I am writing this a few days after I recently listened to the pollster, Sir John Curtis, saying there was a 35% probability of this week’s General Election not changing anything. The Conservatives could be the largest party but (once again) with no overall majority.
Add to this there are many activists in Boris Johnson’s Uxbridge constituency who are working tirelessly to overturn his small majority, while he is touring the country drumming up support for his greater cause.
It is therefore not without possibilities that over the weekend following the Election, the Queen will look to the leader of the largest party to form a Government. In this scenario how quickly can the Conservatives find a new leader, temporary or permanent, with the necessary support to be able to govern?
If the Conservatives cannot provide one will the Queen turn to Jeremy Corbyn? Remember in 2010 Gordon Brown led the largest party but it was with the support of the Liberal Democrats that David Cameron was able to form a Government. Will Jeremy Corbyn be able to get support from other parties and at what price?
Remember this could all be happening just before Christmas. The Queen will be looking forward to being with her family at Sandringham. When will Parliament rise for its Christmas recess? Will we have a Government by then? When will the Queen’s speech be? When will the new Government begin to start work?
The new Government needs to ratify the Brexit withdrawal agreement by 31st January or someone needs to ask for another extension. What could go wrong?
A 35% probability with just a few days to go to polling is quite a risk. Yet no one is talking about it. Every politician is talking as if they will win a sufficient majority to put their proposed programme in place.
It is a little like retirement income planning. It is not a very good conversation to have about all the things that could go wrong.
There is a 25% chance that someone aged 65 will need long-term care before they die. How will it be provided and paid for? What if the client’s partner is one of those 25%, how will they cope?
Will they or their partner be able to manage their own affairs? Is now the time to address those powers of attorney?
There is a 100% certainty of death. But when will death occur? Again, for a 65-year-old there is a 10% chance it may not occur until after age 100; what does that mean for how they spend their retirement savings? On the other hand, they or their partner may die within a few years of retirement. Has sufficient provision been made for the survivor? Has consideration been made about funeral wishes and how they will be paid for?
Only 5% of estates currently pay Inheritance Tax. This is partly due to the fact that many do not have sufficient assets to generate the tax liability. Many of those that do, have planned to either avoid the tax or reduce its impact. Could your client be affected by Inheritance Tax and when should they start to plan to mitigate its effects? What about those Wills, are they up to date?
There are some very good tools that enable the probability of certain retirement cash-flow scenarios being successful. At what level do you consider the probability of not succeeding to be a possibility and consider other courses of action?
We know that many are retiring with insufficient pension savings. If there is a 75% possibility they will run out of money by age 85, the average life expectancy for a 65-year-old, what is the plan? Should a contingency be factored in? Now add in care costs occurring from age 79, and the chances are that the remaining money will be extinguished several years earlier.
The most common contingency that will be called upon will be housing wealth. Doomsday probabilities can only add worry to what should be an enjoyable time of life. How housing wealth can be used to provide contingency back-up should be part of a retirement conversation, if only to provide peace of mind and reassurance.
These are the conversations that should be had, and the percentages that should be weighed up. Quite simply, none of us know what the future might bring – not even politicians – and so it makes sense to plan for as many potential possibilities as you can think of. What happens in the future, particularly the 13th December, is (at this time) unknown.
Bob Champion is chairman of the Air Later Life Academy
