After 38 years in financial services, there are still things that can surprise me.

One of these was the recent Yorkshire Building Society survey which revealed that one in three of us would run out of money within less than two weeks, should we become unemployed. This means that those people have less than £500 in investments and savings.

State benefits, at £75.40 a week, will not go very far against an average weekly expenditure of £334 (although incapacity benefit could boost this a little).

The problem is that too many of us have relied on increasing house values as a cornerstone of our investment strategy for far too long; in many cases actually exacerbating the problem by borrowing more (and so increasing outgoings) in order to “cash in” on the rising value of property.

Falling house prices are not necessarily a problem unless you have a high loan to value mortgage and wish to move, or unless are suddenly made redundant or become unable to work and have no appropriate insurance.

But relying on just one asset class for your investments can be dangerous; and although the National Housing Federation has suggested that average house price in England will rise by 25% over the next five years to reach £274,700, most commentators believe that this will only be after a continued fall for some time to come.

There are several groups for whom the Yorkshire BS survey should act as a clarion call:

• Those with families, high mortgages and small savings should consider making a regular commitment to savings immediately – cash ISAs are usually a good start;
• Those planning their retirement, who were relying on their homes (or even their business) to provide a realistic income when they stop working, need to consider a more structured approach – especially considering the tax breaks for pensions;
• Those at the point of retiring should consider a strategy that gives then the best and most flexible income in future, so that they can react to changing market conditions – just taking an annuity from the insurance company that built up your fund is not an option, the “open market option” should always be used to find a better return, including the income drawdown and flexible annuity options.

Planning is essential; why not contact Robert Bruce Associates for assistance?