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Planning Your Goals & Big NHS Pension Changes by Ray Prince

Recently we've touched on the subject of happiness, and what is needed to be happy.

We've also mentioned the fact that, generally, people can start to really think about living the life they love and want if they are financially secure, and feel in control of their lives.

After all, it's difficult to plan for the next 20 years thinking lovely things if your daily life is all about struggle, worry and survival.

This is very relevant when discussing the new HMRC pension tax changes, and the NHS Pension Scheme rule changes that are to be announced soon.

Many doctors and dentists are very worried about the impact that all these changes will have on their finances. Having started to take into account these factors already, and with The Hutton Review yet to be fully announced, many clients are keen to assess what impact the changes may have on their personal plans.

This is particularly true since our clients typically earn (in the NHS) 100k-150k pa or more, and usually have 20-30 years Service plus.

This is where the new rules on the Annual Allowance (how much you can contribute to your pensions) can become tricky. If you add the fact that HMRC is reducing the amount you can have in your pension pots (the Lifetime Allowance) from 1.8m to 1.5m in April, there are a lot of calculations to make!

As ever, we want the client to have the funds to achieve their goals, and to do this as safely and as tax efficiently as possible. But these changes are a real threat to senior medics and dentists who earn high amounts and have paid into the scheme for many years and who are perhaps just a few years away from retirement.

Quite simply the government want their pound of flesh, and have targeted the higher earners in particular by introducing these new limits.

We are awaiting the full details of the changes, but the next year or so should prove interesting as we review all the planning for existing clients, and see what new clients bring to the table!

In fact, we have just agreed to work with a Consultant who has Mental Health Officer Status, meaning her 40 years' service is completed by age 55!

From experience, we know that having a financial strategy is the surest way for you succeed in your aims, and since we have not touched on this for a while, what exactly is proper financial planning about?

We say 'proper', as there are some financial advisers who operate by simply selling a series of financial products and rely on the commission from this for their income.

No sale no income.

There's nothing wrong as such with this proposition, it's just that we believe there's a more reliable way in which you can plan your future.

Planning is not about amassing wealth for the sake of it, it's all about ensuring you have enough money to turn your dreams into reality.

Our clients will know this, but if you don't currently deal with us, here are extracts from the material we give to new clients to help them create the life they want.

Goal Setting - What do you really want out of your life?

Our Mission Statement:

To empower you to achieve your goals by questioning and measuring your financial life planning.

The first step of any successful financial strategy is to decide what your objectives and life goals are. Get your goals right and everything falls into place.

Successful people have a clear vision of what they want and are working towards.

"The Harvard class of 1954 was asked who among them handwritten down on paper the goals they hoped to accomplish in their lives. Only 2% had taken the time or had the inclination to specifically and clearly record their goals in writing.

Twenty years later, the same group was contacted. Those individuals who were in the 2%, those who had clearly defined, written goals, had amassed more wealth than the remaining 98% combined".

Simple, yes.

But easy?

Probably not.

But we believe that you must have a clear vision of what you are working towards, in order to motivate yourself. Successful people are very clear about who they are and what they want.

Unsuccessful people are often confused and uncertain.

However, it is not easy to get your goals right. If it was easy, everybody would be doing it. Getting it right requires clear thought, some soul searching and, above all, honesty.

For many of our clients this is the most challenging and revealing part of their financial plan. Goals require a serious personal commitment. You cannot set a goal for anyone else.

It must belong to YOU.

How do you do it?

When people do have goals, they often define them in material terms - for example, a larger house, a better job, more money, a luxury car. Most of us are under the delusion that we act freely.

In truth, we are often enslaved to our egos and to ego-based aspects of our materialistic lifestyle. We can be held captive by our jobs, our mortgages, our clothes or our need to outdo others.

Although many of your concerns will be money orientated, self discovery often has little to do with attaining vast sums of money.

Success, we believe, is composed of four key ingredients:

• Health and Energy

• Loving Relationships

• Meaningful Work (a person's need for meaning and purpose)

• Financial Independence (we need to have enough so that we do not worry)

Take the time now to write down on a piece of paper all the things that you honestly want for yourself, your dreams and aspirations. You can be as selfish as you like as they can concern only you.

These are likely to fall into a number of broad categories:

• Personal

• Relationships

• Work • Physical / health

• Personal space / environment

• Educational / intellectual

• Hobbies / interests / passions

Don't confuse what your real goals are with haphazard thoughts. Some of the ones we commonly hear are when clients say they want:

• A big pension

• Enough money

• Save some money for the family

• Pay off the mortgage

It's fairly obvious to see that these thoughts will not help them build a robust financial plan.

So, once a client has focused on their real goals in life, we then look at timescale.

'Dreams are just dreams if you don't have a deadline'.

As an example of dreams becoming reality, a Consultant client recently decided to work part time from age 60, taking 24 hour retirement and taking his NHS Pension. After reviewing his situation, we confirmed that his finances were in good health and that this was a good option.

This freed up time to enjoy his hobby of boating amongst other things.

But instead of working, say 3 days a week, he made an arrangement with a colleague (who also wanted to go part time) for each of them to work one week on and one week off.

This really gives him the quality time he needs, and as a result he can go boating for a week at a time very easily.

Perfect!

The Financial Tips Bottom Line

Planning is becoming even more important due to the radical changes in the NHS Pension Scheme with regards to The Hutton Report and recent HMRC announcements on tax.

Having a cohesive financial strategy allied to what you want to achieve in your life is vital.

ACTION POINT

Do you have your own financial strategy based on your measured goals? Are you taking into account all the recent changes in pension taxation and will you be hit with an unexpected tax bill? What effect will The Hutton Report have on your finances?

Take professional advice from a fee based financial planner you can trust who will review your position and provide you with a comprehensive strategy for the longet term.

Ray Prince is a fee based Certified Financial Planner with Rutherford Wilkinson ltd, and helps UK Resident Doctors and Dentists plan to achieve their financial objectives. Just visit http://www.medicaldentalfs.com to request your free retirement planning guide. Rutherford Wilkinson ltd is authorised and regulated by the FSA.

Article Source: http://www.earticlesonline.com/Article/Planning-Your-Goals---Big-NHS-Pension-Changes/1149056