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The vast majority of investors want to improve their knowledge. In fact, according to research from Schroders, 97% of investors want to boost their personal finance know-how.

While a third wanted enough knowledge to comfortably make their own decisions, almost half wanted enough to be able to probe the advice they’re given. A further 17% said they wanted enough knowledge so they can confidently ask questions of a financial adviser.

Unsurprisingly, the volatility within global markets has focused the minds of investors. Half (49%) said they thought about their investments at least weekly, up from 35% before the crisis. With investment values falling in the short term and concerns about what the future holds, improving knowledge can help you feel more comfortable with market movements and planning for the future.

So, what can you do to boost your investment insight? Here are five steps you could take.

1. Read and listen to podcasts

Reading and listening to podcasts can be a great way to improve your basic knowledge and create a foundation to build on.

Online there’s a huge range of resources you can access. However, you should always make sure the information has come from a trusted source that can be verified, there’s a lot of misinformation and scams out there too.

Our blog includes a range of financial news and views that can help you get started. If you prefer to listen while you’re on the go, the Meaningful Money podcast covers a range of topics and is aimed at those wanting to improve their knowledge. Season two of the podcast is titled Investing 101 and covers a range of investing fundamentals, from why you should invest to understanding risk profiles.

2. Keep up to date with the markets

Make a habit of reading the financial section when you browse the news. Keeping an eye on the markets, how they move and what’s influencing them can boost your understanding of your own investments. Even just a glance each day can slowly build up your knowledge.

One important thing to remember here is that you should focus on long-term trends. Market updates will typically focus on what’s just happened, but you’ll need to put this into context with wider market movements.

3. Seek information on risk and volatility

Understanding risk and volatility when investing is important. Novice investors sometimes view these as the same thing, but they’re not.

Risk relates to the likelihood that the value of your investments will decrease. Higher risk products will typically offer an opportunity for higher rewards to compensate for this. But, while the potential returns can seem attractive, high-risk investments aren’t right for most investors. The level of risk appropriate will depend on your risk profile, which should consider many factors, from the investment time frame through to your attitude.

Volatility, on the other hand, describes an investment’s short-term fluctuations. These market movements can be easier to focus on, as you’ll see how they directly impact the value of investments. However, once again, it’s important to focus on the long-term trend and remember that short-term losses are only on paper until you sell assets. 

All investments come with some risk and will experience volatility.

4. Don’t be afraid to ask questions

The world of investing can seem complex when you first start investing and it’s filled with jargon. If you’re unsure about something, ask. It’s a way to help build up your knowledge and fill in the gaps. Keep in mind where you’re seeking answers from, is it a reputable and trustworthy source?

One thing to be cautious of here is that the world of investment is full of opinion. If you ask, ‘where should I place my money?’ or ‘is now the right time to invest?’ to two people, you can end up with wildly different responses. Remember, your financial plan and long-term goals will play a role.

5. Speak to a financial adviser

Finally, working with a financial adviser can help you better understand your investments. While a third of respondents in the Schroders survey wanted to gain significant investment knowledge so they didn’t necessarily need to seek professional advice, it can still add value.

A financial adviser is on hand to answer your questions, from how your risk profile was calculated to what long-term investment gains mean for your lifestyle. As someone who is regulated and qualified, you know it’s information you can rely on. Even as your investment knowledge improves, a professional can provide another perspective and ensure your portfolio reflects changes, for example, when new legislation is brought in.

If you’d like to talk about your investments and how they fit into your financial plan, please get in touch. We’re happy to answer your questions and help improve your investment knowledge. 

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

With the stock market experiencing volatility due to Covid-19 earlier this year and further uncertainty about the state of the economy, you may be wondering how to make the most of your savings. Should you save in a cash account or invest?

Research from Aegon found that one in eight people have opened up a new saving account during the coronavirus pandemic. Some 70% have opted for a cash-based product, while just 30% have chosen to invest their savings through stocks and shares.

There’s no right or wrong answer when deciding between cash and stocks and shares, but you do need to consider your goals.

Cash savings

In the current climate, the main drawback with cash products is low-interest rates.

Interest rates have been low since the 2008 financial crisis. However, the Covid-19 pandemic led to the Bank of England slashing its base rate to a new low of 0.1% in March. It means you’re probably not getting much in return for saving your money.

On the face of it, that doesn’t seem too bad. After all, your money is ‘safe’. However, once you factor in inflation, which is likely higher than your interest rate, your savings will be losing value in real terms. That means your spending power is decreasing as time goes by. In the short term, the impact is small, but it can compound over longer periods.

When should you use a cash product? Cash savings are often most appropriate if you’re building an emergency fund and are saving with a short-term goal in mind.

Investing in stocks and shares

This year we’ve seen significant volatility within stock markets as governments grappled with how to slow the spread of Covid-19 and many businesses were forced to adapt or temporarily close.

With headlines stating markets ‘crashed’ in March, it’s not surprising that some savers are now nervous about investing in the current climate. However, when assessing markets and investment opportunities, you need to take a long-term view. Short-term volatility is normal in markets, what you should be looking at is a wider trend.

Despite numerous ‘crashes’ over the decades, markets have recovered and gone on to deliver long-term gains to investors. If it aligns with your goals, investing during a downturn can be beneficial, as you’ll be buying stocks and shares while they’re at a low point.

It’s important to recognise that all investments do come with some level of risk though. You should make sure this is tailored to your risk profile and that your portfolio is suitably diversified.

When should you use a stocks and shares product? Ideally, you should invest with a long-term time frame (more than five years) only.

Consider an ISA when saving and investing

Despite being a popular product, just a third (34%) choose a cash ISA (Individual Savings Account) to place their savings and 15% choose a stocks and shares ISA.

ISAs are a tax-efficient way to save and invest. Whether you choose cash or investment products, an ISA is worth considering. Any money earned through interest or investment returns is tax-free. Adults can place up to £20,000 into ISA products each tax year. You can deposit into a single account or spread across several.

If you’re saving for children or grandchildren, a Junior ISA (JISA) may also be a good option. Again, they are tax-efficient, and you can choose between cash and stocks and shares options. Up to £9,000 can be deposited in a JISA each tax year. However, keep in mind withdrawals cannot be made until the child is 18.

Steve Cameron, Pensions Director at Aegon, said: “Saving for the future has never been more important, and the choice between cash and stocks and shares is arguably more difficult than ever.”

He added: “For those not confident making their own financial decisions, it can often pay to seek financial advice. This can help individuals gain a better understanding of their personal attitudes to investment risk and build confidence that a chosen strategy can deliver in line with their goals.”

If you’d like to discuss saving and investing with a financial planner, please get in touch. Our goal is to understand your aspirations and help you get the most out of your money with these in mind.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

When we discuss financial planning, ensuring long-term security for you and loved ones is often a priority. But for business owners, they also need to ensure they protect their firm in the event of something happening to them. If you haven’t already taken steps to name a Business Lasting Power of Attorney, it’s something you should consider.

A personal Power of Attorney gives someone you trust the ability to make decisions on your behalf should you lose mental capacity, for instance, through illness or an accident. These decisions could relate to medical care or ensuring you continue to meet financial commitments. It’s a process that improves your security should something happen.

A Business Power of Attorney is less well-known but works in a similar way.

As a business owner, the firm likely relies on your skills and knowledge, as well as the decisions you make on a day-to-day basis. If a sudden illness affects you and you’re no longer able to make these decisions, it can have serious ramifications for the firm, employees and your long-term livelihood.

Even if you have someone you trust, without a Business Power of Attorney in place, they may not be able to access bank accounts or sign off contracts. The delays can lead to the demise of a business or significantly harm prospects.

Do you need a Business Power of Attorney?

If you were unable to make decisions, how effectively could your business run? If it means decisions relating to day-to-day operations or even long-term plans aren’t made, what would the effects be?

Depending on how your business is set up, there may be a whole range of things you might do that someone else can’t. This may include overseeing bank accounts, signing new contracts, paying employees and invoicing, or handling tax matters. If you were unable to make decisions it can have a serious impact on the business.

No one wants to think about not being able to make decisions themselves. But much like naming a personal Power of Attorney, naming one for your business is a precautionary measure.

Without a Power of Attorney, the business would have to rely on the Court of Protection to give someone the ability to act. However, this can be a lengthy process that takes months. It means some damage may happen before the Court of Protection names a deputy on your behalf. There’s also no guarantee that the Court of Protection will appoint the same person you’d have chosen.

It’s natural to have reservations about setting up a Business Power of Attorney but it offers protection.

Through a memorandum of wishes, you can set out how the attorney should operate the business. This can give you peace of mind that the business will proceed and move forward in line with your plans. You may also worry that using a Power of Attorney means you could lose permanent control of the business. However, where the loss of capacity to make decisions is temporary, the powers given to an attorney are too.

You need to carefully consider who you’d name as a Power of Attorney too. It should be someone that you trust but they also need to have the skills and knowledge to effectively make the decisions they need to. As a result, it may be someone inside the business that suits this role. It’s worth reviewing this regularly, as the right person may change over time.

Protecting your wellbeing

A Business Power of Attorney isn’t just about protecting business interests either. It can also provide you with security.

It protects your livelihood and ensures you have a business to go back to when you’re ready. Safe in the knowledge that someone you trust can make decisions, you don’t have to worry about going back to the business as soon as you can. Instead, you’re able to focus on your recovery and ease back into the role of business owner when it suits you.

If your business could benefit from a Power of Attorney, seek legal advice. A legal professional will be able to help you understand what permissions should be given to an attorney to ensure the business continues to run smoothly. They can also help you draft a memorandum of wishes that outlines how the business should run if needed.

For many business owners, their personal financial plans are often intertwined with their business. As a result, it’s worthwhile reviewing your financial goals and situation alongside taking these steps.

Ultimately, a Business Power of Attorney can support the long-term security of the business, employees and your livelihood. Please get in touch if you’d like to discuss this further.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Everyone has at some point daydreamed about what they’d do if they suddenly came into a large amount of money. But what would you do if it really happened?

Whether it’s enough money to buy a new car or a gold-plated yacht, if you receive an unexpected windfall you should always think carefully before spending it. Take your time to consider your options as you might be feeling overwhelmed.

If you’ve received a large amount of money, it’s important to be mindful of the limits set by the Financial Services Compensation Scheme (FSCS) on how much compensation you will receive if the bank fails.

Temporary higher balances of up to £1 million will be compensated for in the first 12 months per person per bank or building society. But after that, you will only receive a maximum of £85,000 for any lost savings. So, if you do decide to put your new-found money in the bank, it might be worth spreading it out across several banks to ensure that it’s all protected. 

A large sum of money has the potential to transform your life if you use it wisely. So, read on for five things to bear in mind if you come into unexpected money.

1. Make a plan of what your goals are

Although we might daydream about it, most people don’t keep a detailed plan on what they’d do if they came into a large amount of money.

However, it is important to make one before you think about splashing your cash recklessly. Otherwise, it can be all too easy to get overly excited and start frittering it away on things you don’t really need.

Write down everything you might want to buy or do with the money, including giving gifts. This could be anything from going on holiday to helping a loved one to purchase a home. Don’t just think about the things you’d like to do now, but those further away too.

It can be easier to plan when you have all the information in front of you, not just vague ideas. A plan will help you see which goals you can afford now, and which goals you may be able to afford in the future, with careful management of your money. Long-term goals might include retiring early or building a legacy to leave behind for your family.

When making this plan, you may benefit from the advice of a financial adviser. We can help you to organise your finances to help you meet your goals in the short and long term.

2. Pay off your debts to avoid interest payments

Settling your debts is usually the most sensible thing to do if you come into unexpected money.

By settling debts now, you can save yourself from having to repay interest on the debt later, which compounds over time. This can save you large amounts of money, especially if it is a large debt or one with high-interest payments.

It may also be wise to pay off short-term debts, such as overdrafts or credit cards, first since they typically have higher interest rates. After you’ve paid those, you can start thinking about paying off other long-term debts, such as mortgages.

3. Keep an emergency fund

Nobody can predict the future, so no matter how well you manage your money, it’s always worth keeping a rainy-day fund. This can give you peace of mind if disaster should strike.

Although the spending power of cash is eroded by inflation, it can still be important to keep a fund that’s easily accessible just in case. As a general rule, it’s worth setting aside an emergency fund with enough money to cover three to six months of expenses.

With this, you can rest easy knowing that even if the worst should happen, you’ll have some money to fall back on.

4. Decide whether you want to save or invest

One important decision you will have to make is whether you should save your new-found money or invest it. Your goals should have a strong influence on what you decide.

If you’re averse to risk, putting your money into a savings account may suit you. Unlike investing, your money is safe from losses, assuming you stay within the limits of the FSCS. But it may not increase in value much, if at all, as current interest rates are likely to be below inflation.

Putting your money in a savings account is also useful if you have a short-term goal in mind, such as booking a holiday.

On the other hand, if you have a long-term goal, such as building wealth to pay for a comfortable retirement, it might be worth considering investing your money instead. Investing can help you grow your wealth in the long term, but it does come with risks. You should invest with a minimum time frame of five years in mind.

5. Seek the help of a financial adviser

If you come into a large amount of money, you should consider speaking to a financial adviser who can help you to use it to achieve your goals.

It might be tempting to think you don’t need one. A study by AKG revealed that 43% of people who had not seen a financial adviser in the last five years believed they already had enough knowledge to make financial decisions for themselves.

However, when you’re dealing with large amounts of money, it can be hard to use it efficiently and understand how it can support long-term goals. Financial planners have experience overcoming the issues that may arise, such as dealing with complicated tax laws, to help you get the most out of your windfall.

A study by YouGov has shown that only 27% of people would consider speaking to a financial adviser after receiving a windfall. If you want to use your money more effectively to reach your goals, you shouldn’t be one of them. Please get in touch to discuss how we can help you realise your goals.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A Power of Attorney is just as an important part of estate planning as writing a will. Yet, it’s something that many people overlook, potentially leading to challenges for their loved ones and placing themselves in a vulnerable position.

Power of Attorney gives someone you trust the ability to make decisions on your behalf, if you don’t have the mental capacity to do so. This may be temporary, for instance, following an accident, or permanent, due to an ongoing illness.

It’s often overlooked because we think it’ll never happen to us. However, it’s estimated that there are 850,000 people with dementia in the UK, with the figure projected to rise to 1.6 million by 2040, and this is just one example of an illness that can affect mental capacity. There are many other examples of where an individual cannot make decisions entirely on their own. Having a Power of Attorney in place can ensure someone can make decisions for you.

One important thing to note is that a spouse or civil partner doesn’t have the automatic right to make decisions on your behalf. A Power of Attorney is still required.

There are two types of Power of Attorney. The first covers health and welfare, allowing a trusted person to make decisions about medication, life-sustaining treatment and your day-to-day routine. The second covers property and financial affairs and may include collecting pension benefits, paying bills or deciding to sell your home.

Thinking about handing over the ability to make potentially life-changing decisions to someone else, even those you trust, can be daunting. But the alternative is often far more complex, time-consuming and costly.

Applying to the Court of Protection

If you lose the capacity to make your own decisions and don’t have a valid Power of Attorney, the application goes to the Court of Protection. The court can:

  • Decide whether you have the mental capacity to make a decision
  • Make an order relating to health and care or property and financial decisions if someone lacks mental capacity
  • Appoint a deputy to make decisions on behalf of someone who lacks mental capacity

A deputy is a similar role to that of attorney, including the principle that they must make decisions based on your best interests. The ability of the Court of Protection is a useful safety net but it’s not one that should replace naming a Power of Attorney for three key reasons:

  1. The decision may not align with your wishes: The person appointed as deputy may not be your preference. Using a Power of Attorney means you’re in control of who will be making decisions on your behalf. This gives you a chance to discuss what you’d want to happen. 
  2. Initial and ongoing costs will usually be more: To apply to become a deputy through the Court of Protection costs an initial fee of £365, with a further £485 needed if the court schedules a hearing. On top of this, a security bond may have to be set up if someone is appointed a property and financial affairs deputy and an annual supervision fee will be due. The cost of this will depend on the size of your estate. In contrast, it costs £164 to register both types of Power of Attorney.
  3. It takes time to arrange: Once an application has been made, the Court of Protection aims to issue an order within four to six months. During this time, you may be left in a vulnerable position, with loved ones unable to make a decision on your behalf. 

Putting a Power of Attorney in place

The good news is that more people are naming a Power of Attorney. Between January and March 2020, the number of applications was up 5% compared to the same quarter last year. This is partly attributed to the government taking steps to make the process easier and faster.

You can access the online service to create a Power of Attorney here. Remember, you will need to register your Power of Attorney with the Office of the Public Guardian for it to be valid, this can take between eight and ten weeks.

As you name a Power of Attorney, it’s worth reviewing your wider estate plans too. It can help you have an open conversation with the person you trust about what your preferences are and how your wealth may change over time. Please get in touch with us if you have any concerns or questions.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning.

The Covid-19 pandemic has meant we’ve evaluated many areas of our lives and priorities. One area that’s now being reconsidered by the over-60s is their later life care plan.

Research suggests that the challenges and restrictions care homes faced during lockdown mean people are keen to explore the alternatives. With many care home residents being vulnerable to illness and the proximity to others, they faced higher infection rates. This sadly led to death and serious illness in some cases, with loved ones unable to visit to offer comfort.

On top of this, care homes stopped permitting visitors, in line with social distancing guidelines, which had an impact on the quality of life and relationships for residents.

As a result, it’s not surprising that one million over-60s that had originally planned to go into care homes later in life if needed, are now rethinking their plans due to growing concerns from family members. Nearly a fifth (19%) of Brits who would have previously been open to care homes as an option for family members, now wouldn’t consider it.

What are the alternative options?

Moving into an assisted living facility, which offers more independence than a care home, or moving to a more manageable property are two of the most popular options. Around a fifth of Brits would choose each of these as their primary option. Others plan to rely on family for the additional support they may need later in life. One in ten would consider moving into a spare room at a loved one’s home while 6% would opt for a granny annexe.

Whether staying in their own home or moving in with family, respondents recognised the need for adaptation. Two thirds (67%) believe they need to alter properties in some way. The most popular home improvements include:

  • Making modifications to the bathroom (34%)
  • Installing an emergency alarm (27%)
  • Installing a chair lift (22%)
  • Buying new furniture, such as a bed with rails (22%)
  • Installing mobility features like ramps (19%)

The number of people recognising the need for such modifications shows over-60s aren’t shying away from the fact that more support may be needed in their later years. However, there is one important factor that many have failed to overlook, and that’s the associated costs.

Planning for the cost of later-life care

Worryingly, 55% of over-60s haven’t considered how they would fund later-life care or necessary adaptations. What’s more, a fifth (21%) expect to use their State Pension to cover these costs, but at £175.20 per week (£9,110.40 annually), it’s unlikely to stretch very far.

If you moved into a care home, you could expect significant outgoings. In 2019, the average cost of a residential care home was £33,852 per year, rising to £47,320 if nursing care was included.

Alternative options may be cheaper, but the costs still add up. An assisted living facility will come with ongoing charges for the care provided. If you were to remain in your home but required the support of a carer for two hours a day, you can expect to pay around £20 per hour. That may not seem like much but adds up to £14,560 per year.

Even if you remain in your home and don’t require additional support, necessary adaptations can take a sizeable chunk out of your savings or income. In England, council support may be available if adaptations cost less than £1,000 if it’s been deemed necessary. Further support is typically means-tested, so the costs could fall to you.

Despite the sums of money associated with later-life planning, the financial aspect remains overlooked. But it should be part of your wider financial plan.

As you think about what type of support you’d prefer later in life, it’s worth reviewing your finances and overall goals. Financial planning can help you understand how your assets can be used to provide you with security for the rest of your life, including where some form of care is needed.

It’s a process that can also create a safety net for when obstacles derail your plans. You may intend to move in with a family member but circumstances outside of your control mean it’s not an option when the time comes. With a financial plan that’s considered this in place, you can rest assured that other options are still available. It can also help you understand how the potential cost of care could affect other priorities, such as the income you take during early retirement or the legacy you leave behind for loved ones.

If you’d like to discuss your plans for funding later-life care, please get in touch. We’re here to help you create a blueprint that considers your wishes and give you peace of mind.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Have you reviewed your pension lately? Even though we make regular contributions to pensions, it’s not often something we think about until retirement is approaching. However, keeping track of progress during our working lives is important too.

Figures show that pension savers have been using their time in lockdown to get to grips with their retirement pots. Some 37% of pension savers, the equivalent of seven million people, have taken action relating to their pension in the last few months. One in seven admitted that the lockdown has prompted them to think about their pensions more.

So, if it’s been a while since you looked at how your pension is growing, now could be the perfect time. But what should you focus on? These seven areas are a good place to start.

1. The total value of your pension

The headline figure is probably what draws your attention when you look at your pension, and it’s something you should keep an eye on. Yet, it’s a task just 15% have done during lockdown.

Keeping track of the value of your pension can help you understand whether you’re on target to meet goals and give an overview of how investments perform. The current value alone doesn’t provide you with all the information that you need, which is where the forecast comes in.

2. Check your pension forecast

It can be difficult to understand how the value of your pension now will affect your retirement. Pension providers will offer a forecast, indicating how your savings are likely to grow over time. Keep in mind, this isn’t guaranteed, but it can be a useful base to work from.

With a forecasted lump sum, you’re in a better position to understand the lifestyle your savings will afford you. A financial planner can help put this into the context of your goals, such as the annual income it will deliver.

3. Act if you have a pension gap

Acting if you find there is a gap between your pension forecast and the amount you need to meet aspirations can help set you on the right track. The sooner you act, the easier it is to close the gap or seek alternative solutions. Even a small contribution increase can have a big impact if it’s taken early in your career thanks to the compounding effect.

The figures found 5% of pension savers have increased their contributions during lockdown. It’s a step that could make your future more financially secure.

4. Understand where your pension contributions are coming from

Every month, you’ll probably see a portion of your salary go into your pension. But it’s likely you benefit from other contributions too. Understanding the impact these have on your overall savings can help to highlight why adding to your pot is important.

First, if you’re employed, your employer will need to make contributions on your behalf. An employer must contribute 3% of your pensionable earnings. Second, the government also provides tax relief on the contributions you make. Tax relief is set at the highest rate of Income Tax you pay.

In both these cases, your pension is effectively benefitting from ‘free money’ when you contribute.

5. How your pension savings are invested

How a pension is invested is often overlooked. But it’s an important part of managing your retirement savings and making the most out of contributions.

When you first start saving into a pension, your money will be invested in the default fund. However, pension providers will offer alternatives. These will often include a variety of risk profiles or the option to select an ethical investment fund. As with when you’re investing outside of a portfolio, you should consider your goals, investment time frame and capacity for risk.

Just 8% of people have checked where their pension is invested during lockdown. However, 5% have made a change to their pension investments, indicating that for many the default fund may not be the right option.

6. Your pension age

A pension provider will make an assumption about when you plan to retire, usually linked to the State Pension age. If you plan to retire earlier or continue working past this age, you should update your profile.

How your pension is invested may be affected by your retirement date. For instance, many pension providers will move savings to a lower-risk investment fund as your retirement date draws near to reduce the risk of volatility significantly affecting value. If your retirement date is wrong, this may not align with your plans.

7. Check if your employer offers additional pension incentives

Your employer may offer additional incentives to encourage you to save more into a pension. These can prove valuable and help your retirement savings grow faster.

Some employers will match your contributions up to a certain level. In this case, increasing your own contributions would mean you receive even more ‘free money’. A salary sacrifice scheme may also be an option that’s available to you.

Please get in touch if you’d like to discuss your pension and what it means for retirement. The research found 38% of people lack confidence in their financial situation, our goal is to help you feel secure about your future.

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. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.

Even with careful financial planning, shocks can happen. Often financial crises are unexpected and out of our control, so it’s important to have a safety net to fall back on. However, research suggests that most people don’t feel confident in their ability to overcome a financial crisis.

Whether it’s unexpected property maintenance or redundancy, it’s essential that you feel confident in your financial situation. Research from Aegon indicates this isn’t the case for millions of Brits though. It found just three in ten men and two in ten women are confident they could financially handle a major unexpected expense. Money worries emphasised this lack of confidence too. 76% of women and 72% of men admitted they worry about money.

If that sounds familiar, here are five steps you can take.

1. Keep track of your spending

It’s easy to lose track of where our money is going. But it’s a sure-fire way to miss opportunities that could save you money.

Keeping tabs on a household budget can highlight were direct debits, such as utility bills or phone contracts, have crept up. A regular review will help you find the best deals and reduce essential living costs. It can also highlight where discretionary spending is adding up. Small expenses often go unnoticed when you look at the bigger picture, but they can have an impact. If you’re worried about money because you feel you’re not saving enough, for instance, cutting back here can help.

2. Reduce high-interest debt

If you have existing high-interest debt, such as credit cards or loans, you should prioritise repaying these.

Interest rates on savings are at a historic low. As a result, money in your savings accounts is likely to be offering significantly less interest than the amount you’re paying to service the debt. Reducing debt first can mean your outgoings are eventually reduced, allowing you to divert more to savings in the future.  

Not only does it make financial sense to pay off debt, but it can be a weight off your mind. People often find their financial wellbeing and their confidence improves when they are debt-free.

3. Build up a rainy-day fund

Having a financial safety net to fall back on can deliver more confidence too. It’s recommended that you keep three to six months’ expenses in an easy access savings account. This gives you a financial buffer should something happen.

It can seem like a large target if you’re starting from scratch. But you should make it part of your budget, transferring a set amount each month. As it gradually grows, you’ll hopefully start to feel more confident in your financial security.

4. Consider your long-term financial plan

Often when we worry about money, it’s the short term we focus on. However, looking ahead to the medium and long term is also important and can be a source of anxiety. Once you feel more confident in your current finances, turning your attention to goals further down the line is the next step.

This may include adding more to your pension, building up an investment portfolio or creating a nest egg for children or grandchildren. Knowing you’ve taken action to meet long-term aspirations can provide a confidence boost and help you feel more in control of your finances.

5. Seek financial advice

The research suggests employees would like additional financial support. 69% of women and 65% of men would find face-to-face financial advice useful, as it allows them to address specific concerns. Even if your workplace doesn’t offer these types of benefits, it is possible to get the type of support you could benefit from.

Some services can offer guidance on a range of financial wellbeing issues, from debt management to your options at retirement. Seeking financial advice can also help you create a holistic financial plan that addresses your concerns, goals and long-term ambitions. It’s a process that can give you confidence in your ability to weather the unexpected, including financial shocks. To discuss your needs, please get in touch.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

While the health concerns of the Covid-19 pandemic remain, some of the focus is now shifting to the economic impact. Measures taken to reduce the spread of infection and save jobs have cost the government a huge amount that will need to be recouped in some way.

The final Covid-19 bill is impossible to estimate, we don’t know how things will change over the coming months. However, the Office for Budget Responsibility estimates the cost for the current tax year is likely to be more than £300 billion. The government was expecting to borrow around £55 billion for the whole of 2020/21. But in the first two months of the tax year alone, it has borrowed £100 billion to cover the costs of the scheme implemented due to the pandemic.

Chancellor Rishi Sunak was appointed Chancellor in February this year. He’s already delivered a delayed Budget in March, as the pandemic was starting to take hold in the UK, followed by the Summer Statement in July. Both have focused on protecting people and the economy as Covid-19 spread. As the Autumn Budget is now approaching, his attention may be turning to how some of the costs can be recovered.

While nothing has been formally announced yet, speculation is mounting that some allowances will be reduced, some of which may affect you.

1. Capital Gains Tax

Speculation that changes to Capital Gains Tax (CGT) will come in are rife after the Chancellor commissioned The Office of Tax Simplification to investigate if it’s “fit for purpose”. Compared to previous levels of CGT, the current rates are relatively low. This provides plenty of scope for allowances to be reduced or rates to rise.

CGT is paid on the profit when you sell certain assets. This may include a property that isn’t your main home, personal possessions worth more than £6,000 (excluding your car), investments not held in an ISA, and business assets.

Individuals have an annual exemption of £12,300 per tax year. Profit beyond this allowance is taxed. Basic rate taxpayers have a CGT rate of 10%, this rises to 20% for higher and additional rate taxpayers. Where the profit is made on property, an additional 8% tax is added for all Income Tax bands.

2. Pension tax relief

A change in pension tax relief hasn’t been mentioned by Rishi Sunak yet. However, his predecessor Sajid Javid has called on the government to reduce the amount of tax relief paid to high earners. It could now be something the current Chancellor is exploring too.

Assuming you don’t exceed your annual pension allowance, you receive tax relief at the highest level of Income Tax you pay. As a result, higher and additional rate taxpayers receive far more through this incentive. The Pensions Policy Institute found workers earning less than £50,000 made up 83% of taxpayers, but they received less than a quarter of pension tax relief paid.

A change to pension tax relief is likely to make it ‘fairer’ by offering a flat-rate tax relief for all pension savers.

3. Pension triple lock

The pension triple lock guarantees that the State Pension will rise every year in line with either inflation, average wage growth or a minimum of 2.5%. It helps to protect spending power among pensioners. Maintaining the triple lock was a manifesto pledge, but some signs are pointing towards changes in the future.

The Chancellor told the Treasury Committee that it would be appropriate for the government to look at the triple lock at the “right time”. There are concerns that a spike in wages would make the guarantee to pensioners unaffordable in the coming years.

4. Pension tax-free lump sum

Currently, when you access your pension, which is available from the age of 55, you can withdraw 25% of the money tax-free. Any further withdrawals are subject to Income Tax, the same way your salary or other sources of income may be.

The tax-free lump sum has proved a popular option among retirees and it’s a decision that’s likely to be unpopular with those approaching their retirement date. Reducing the tax-free lump sum to 20% could add £1.8 billion of extra revenue, the IFS has suggested, making it an attractive option for the Chancellor.

5. Inheritance Tax

Again, any changes to Inheritance Tax rules would prove unpopular but there have been growing calls to reform the system to make it fairer and simpler.

At the moment, individuals can take advantage of two allowances when leaving wealth to loved ones. The nil-rate band is currently £325,000, with no Inheritance Tax due if your estate is below this figure. Those passing on their main home to children or grandchildren can also use the residence nil-rate band, currently set at £175,000. Unused allowance can be passed on to a surviving spouse or civil partner. In effect, this means couples can leave up to £1 million without worrying about Inheritance Tax.

Reducing the allowances or scrapping the additional residence nil-rate band could help raise tax revenue.

Rishi Sunak has some decisions to face before the Autumn Budget, and it’s likely some allowances will be affected. It may be appropriate to change plans when these are announced, but you shouldn’t act on speculation. If or when things change, we’ll be here to help you.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might have read in this article. All contents are based on our understanding of HMRC legislation which is subject to change.

Planning for retirement should be an exciting time in your life. You’re able to give up work and focus on the things you enjoy. But what if your aspirations and financial expectations don’t line up with your partner’s? Creating a balance can help both of you feel fulfilled in the next stage of your life.

It’s not uncommon to find that partners have conflicting views of what they want retirement to look like. While you’re both working, you may have discussed ensuring you have enough saved or even talked about some of the things you’d like to do. However, most of us don’t start considering retirement in great detail until the milestone isn’t too far off. Discussing your plans can help make sure you’re both on the same page as you move forward.

Before you start the conversation, it’s worth both of you separately thinking about the retirement lifestyle you’d like:

  • Are there any ‘big ticket’ experiences you’d like to do?
  • What would your ideal day-to-day lifestyle look like?
  • What are your priorities for retirement?

Understanding what you’d like, can help you identify shared aspirations and where you need to strike a balance between two views. Often when we first think of retirement, it’s the experiences we want in the initial years after giving up work that is the focus, such as travelling or helping to raise grandchildren, but your daily routine as you settle into retirement is just as important.

Understanding retirement finances

While couples may often discuss household expenditure, the same can’t be said for retirement finances. In fact, 24% of couples have never discussed their retirement income. It can mean you have widely different expectations for your income and approach to managing money as you enter retirement.

As with lifestyle goals, discussing what you want is important.

The first step should be to understand what income and assets you expect to have to fund retirement. This may include the State Pension, Final Salary pensions, Defined Contribution pensions, savings, investments, and property.

But understanding assets isn’t the only thing you need to do; you also need to understand how both of you approach retirement finances:

  • What assets will create your base income?
  • How would you create a financial safety net to cover the unexpected?
  • What level of income do you need for the day-to-day lifestyle you want?
  • How do you feel about investment risk as you enter retirement?
  • What kind of legacy would you like to leave behind for loved ones?

The answers to these types of questions will be linked to the lifestyle you want to achieve. However, they can highlight the differences in how you view money, even if it’s something you’ve agreed on before. In the past, you may have been happy investing in mid-risk funds to grow your wealth but in retirement prefer stability and financial security. Your partner, on the other hand, may be keen to increase investment risk as outgoings reduce and you have a base income for essentials. Looking at financial views now can help you strike a balance and understand the short and long-term impact of the options.

How financial planning can help

Financial planning can ensure your goals and finances align. But the process can also help you understand what your priorities are too.

A key part of financial planning is talking to clients to set out goals, lifestyle aspirations and more. We ask what it is you want your savings to do for you. It’s a chance to think about what is most important as you start planning for retirement. Having an outside perspective go through your retirement plan can help you see what your priorities are.

Where retirement goals don’t match up perfectly, there are often solutions that can ensure both of you are happy and confident as you give up work. Getting your finances in order can give you the freedom to do more without having to worry about the uncertainty of the long term. If you’d like to start your retirement planning with us, please get in touch.

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. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change.