When we sit down to plan our finances it is tempting to think of this as a staging process.
So typically, in our 20s we think about saving for a house. In our 40s, about how we are heading (financially) towards retirement, and then later, say in our 70s, once retired, about our legacy.
In 1900 life expectancy was 44 for males and 48 for females. You might consider this a quirk of statistics radically affected by deaths during child birth and infant deaths. To some extent this was true, but the median age of death was 52 and 57 respectively, indicating that people died young – relatively speaking.
Even as recently as the 1970s, more people than not had a short retirement. The pattern was still work and then die. With maybe a few years of retirement in between.
In 1900 and the 1970s, home and land ownership was marginalised amongst a minority of the population, likewise significant savings or pension holdings.
So, the need for advanced financial planning was also marginalised.
The position now is completely different, the majority of people will live beyond their retirement age, and in many cases, well beyond. Many people have property or land, most have savings and pensions.
One aspect of this is the related topic of legacy planning, and so we “get to this” once we get to that stage.
Not too many had this stage, in the past. Either because they didn’t have the so-called prosperity or because they didn’t get to an age where it was relevant.
Legacy planning is not the same thing as making a Will.
The latter may be part of the former, as a subset of the wider planning, but it is not a substitute.
Legacy planning is a dedicated exercise of working out what it is you want to happen when you pass away, in respect of how you want to touch upon others and their lives beyond your life.
You can even redefine it, to say “how do I want to touch upon others lives both before and after I die?”
When we start working on our finances and our wealth like that, we change the framing, which can change our approach, which can change our plans, which can change the decisions we take.
I like to do this when I work with clients and together we work up solutions or a way forward. I want us to take the legacy question full on, as early as we can. Because if we define what it is you want in this way, it creates a spotlight on what really matters, and it is not just about beyond your lifetime, but during it as well.
We don’t know how long we have to live, and although we know on average this is much longer than previous generations, we cannot be sure of anything.
If we can look on our legacy as something that spans the future, regardless of how long we live, then we can use this as the guide to what we need to do today to set the course, and we merge the legacy and financial planning into one.