February 2020

Why Financial Planning should be a Family Affair


A report on pensions by Aviva* found that 36% of those asked who had financial dependents said they would need to retire later than originally planned because of their children’s financial needs. And 12% of working people over 50, with financial dependents, said their parents or partner’s parents financial needs was the only reason they were still working.

These figures help demonstrate that when it comes to financial planning it’s not just our individual needs that impact upon us, there are people in our lives who may also be dependent on us financially. So, when we’re making our financial plans, who and what else should we be considering?

What are you planning for?

Planning for your financial future requires thinking about the life you want to lead, understanding the cost of this and planning how to get there. This planning happens in the context of lifestyle and all the events and surprises we may encounter along the way, such as:

  • Marriage
  • Children’s needs (weddings, university etc)
  • Divorce
  • Loss of income
  • Illness
  • Bereavement
  • Retirement

Each of these events bring financial challenges that affect us and our financial planning and without the proper provisions in place, they can also affect our dependents. Pensions, insurance policies, investment schemes and wills are effective ways of mitigating the financial impact of such events, but only when they are established with a clear sense of where you want to be and who you’re providing for.

Who are your dependents?

To determine your financial dependents, ask yourself who may be impacted by changes in your financial situation and who you want to ensure is financially secure. Is there anyone you want to provide for in terms of:

  • School/university fees
  • Healthcare
  • Elderly care
  • Child savings
  • Grown children reliant on the “Bank of Mum and Dad”

Inevitably, family separations and more blended families means dependents may encompass a broader circle of people; considering how your financial dependents can increase your financial needs and impact your attitude to risk, it’s important to consider their needs at different stages of their lives if you want to provide for them.

The benefits of planning together

When we consider our dependents in financial planning there’s a connectivity between each other that begins to reveal itself. Across the generations there’ll be different financial considerations, but these can present an opportunity to think about financial planning more broadly, particularly in terms of tax planning across the family. Inheritance tax, pensions, financial gifts, children’s savings accounts and properties can all be considered when creating effective financial and tax planning.

The next step: time to talk?

Talking about finances isn’t always comfortable but involving your dependents and those you may be dependent upon in the future can help you all develop a greater understanding of each other’s aspirations for the future and put in place the means to achieve them.

If you would like to learn more about this, how we can support you to determine your financial dependents, or if you would like expert advice on tax, investment and planning opportunities, please contact our specialist team of experts at Holborn Financial.

Reference: *Aviva Real Retirement Report Part 1 - 2017

This Briefing Note is provided for information purposes only and does not constitute any form of financial or investment advice. We believe the information to be correct at the time of going to press but we cannot accept any responsibility for any loss to any person as a result of action or refraining from action as a result of any item herein.  Tax treatment depends on individual circumstances. Both your circumstances and tax rules may be subject to change in the future. Not all areas of Estate Planning or tax planning are regulated by the Financial Conduct Authority.

Printed and published by ©Holborn Financial Limited authorised & regulated by the Financial Conduct Authority.  February 2020