No matter how much you plan, unexpected life events can sometimes derail even the most carefully thought-out strategies. While you can’t predict what’s ahead, you can adjust your response to help keep your financial plan on track. Certain life events can have a significant impact on your wealth, both in the short and long term. These situations, often out of your control, might even prompt you to reassess your long-term goals. That’s why, even with a strong financial plan in place, a financial review following major life changes can be invaluable.
Here are four unexpected life events that could indicate it’s time for a financial review.
1. Experiencing redundancy
Redundancy can have a significant impact on both your immediate and future financial situation.
In the short term, you may need to rely on savings or other assets to cover essential expenses. Additionally, stopping contributions to long-term goals, like your retirement pension, could lead to an unexpected shortfall in the future.
If you receive a redundancy payout, it’s important to consider how best to utilize it to strengthen your financial stability.
According to data from the Office for National Statistics, around 3.4 employees in every 1,000 were made redundant between March and May 2024. A separate poll from SurveyMonkey also found that 58% of employees feel uncertain about their future job security.
If you’ve been made redundant, a financial review could help you identify ways to manage your finances while you search for employment, and then assess the potential long-term impact.
2. Taking Extended Time Off Work Due to Accident or Illness
Being unable to work for an extended period due to an accident or illness can leave you financially vulnerable, impacting both your immediate and long-term financial outlook.
You might think the chances of you being unable to work for an extended period are slim. However, figures released at the start of 2024 and published in the Guardian, highlight how many people are affected by unexpected illnesses. According to the data, 2.8 million people were not working due to long-term sickness at the start of the year.
If you find yourself in this situation, a financial review could help you evaluate how to use your assets to generate a steady income for essential expenses. It can also provide insights into how to keep your long-term financial goals on track.
3. Separating from your partner
Whether married or not, separating from a partner can have significant financial repercussions. When your finances are intertwined, separation can drastically affect your household income, day-to-day expenses, and long-term wealth-building efforts.
Indeed, research led by the University of Bristol found that equal division of joint assets, including property and pensions, was not the norm during divorce. It only occurred in around 3 in 10 cases. This means that one person was likely to miss out financially.
Working with us to review your financial plan after a separation can help you reassess your assets and identify the steps needed to strengthen your financial security.
Following a relationship breakdown, your lifestyle goals and long-term aspirations may shift. Updating your financial plan ensures it remains aligned with the future you envision.
4. Receiving an inheritance
Not all unexpected events have a negative impact on your finances. In fact, receiving an inheritance or a windfall could provide you with more financial flexibility than you previously had.
Managing a large lump sum, especially after the loss of a loved one, can feel overwhelming. When you’re ready, seeking tailored financial advice can help you understand how to use this wealth in a way that aligns with your long-term goals.
Have you gone through an unexpected life event? Contact us for a financial review
Whether you’ve experienced one of the life events mentioned above or faced another unexpected challenge, we can help you review your financial plan to make sure it aligns with your current situation. Contact us to arrange a meeting with one of our team.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
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