What is it about pensions?
At my place in life, having a pretty clear idea of my retirement, and this includes understanding my income, is important.
I thought I’ve figured out my pension; now more changes to the pension system are muted.
Or we could talk about tax if you wish. Only this conversation will be a very short and not terribly exciting – I’m convinced that I don’t ‘manipulate’ the tax system to my full advantage (though I also believe that paying a lot of tax is not a bad thing and a sign of financial health).
And here is the thing: I’ve spent days and weeks working out my pension. I may need to spend weeks and months figuring out the tax system.
Than the rules change and I have to start at it again; like when Budget 2015 was announced.
Wasteful, is it not?
There may be another way.
After Budget 2015 was published, I looked on the Francis Clark Financial Planning: the website home of a team of financial planners. Wow! These guys published a pension update on the latest budget at the same time as the BBC!
I know; I’ve previously written about the things financial planners and advisors won’t tell you.
Today, I’m thinking that consulting a good financial planner is probably not a bad idea.
Here is why.
#1. Complex issues of finance
Most bloggers will tell you that personal finance is simple: you just have to spend less than you make.
I keep telling you that ‘the Devil is in the detail’ and that the Devil is profound.
Two be-devilled issues of personal finance, I find, are retirement planning and taxes. These are very complex and subject to regulation, legislation and government control.
Mistakes are much more costly than a consultation (or two) with a good financial planner.
#2. Changing regulation
Dealing with all issues about money (ultimately YOUR money) is a challenge when this is a matter of state regulation and law.
You can’t just decide not to pay your taxes: you have to follow the rules. Breaking them can land you in prison and stripped of your other assets.
Problem is that this areas of (personal) finance are not only complex: they are also subject to regular change.
As I said, you just think you’ve figured it out and a change in regulation throws your best laid plans in the air.
Keep up to speed takes time, knowledge and dedication. Do you have these?
I thought so. I don’t either.
#3. Amateurs don’t win against professionals
You can decided to do it all yourself but on many matters of your finances you’ll be in a professional game.
Let me ask you this: would you play football against David Beckham? And hope to win?
It’s probably better to have Wayne Rooney on your side.
#4. Long term planning is a challenge
You want to cut your spending?
That’s easy and you don’t need to seek the services of a financial planner: you just need to make a number of short term adjustments to your life.
This is not the case with your retirement. To even stand the chance of dignified old age, you’d need decades of careful saving, investing, choosing pension plans and…generally long term planning.
Thing is, most of us suck at long term planning. We either get despondent or ecstatic; most of the time, most of us are unrealistic.
#5. Making hard decisions
Planning over the long term can be painful.
No, you cannot have iWatch today because you need this money in your pension fund. You can’t just up and travel the world because your children need to go to college.
Reaching an audacious goal tomorrow (or in couple of decades) requires sacrifice, persistence and discipline.
These are easier achieved when we have a professional we trust in our lives.
#6. High entry costs
Specialised areas of personal finance have high entry cost.
To navigate the pension landscape you need many months of study.
I researched the basics: for my sake and so that you, my reader, don’t have to do it. I still have to see what ‘actuary penalty’ is about and how it will affect me.
Do you have the time to become so competent that there won’t be loose ends?
#7. You have no interest but want control
You see, your long term finances are not simply matter of understanding; success is a matter of control.
If you are not a nerd but still wish to control your finances you certainly need to contact the professional.