Author: richard

It’s all too easy, for example, to think your pension will just grow at its own speed and not pay it much attention. By enlisting the help of a financial adviser, though, you can check your pension fund is invested in a way that is getting the best return for you. Investment group, Bestinvest, has stated that twenty six of the top funds in the UK, containing £6.4 billion, are badly underperforming, and have been doing so for three years. In fact, at times, they have failed to meet their targets by over 5 per cent. An adviser will be able to monitor the situation and, if necessary, transfer your savings into better performing funds.

Another ‘new part’ you may decide to investigate may be insurance. You could already have life assurance in place but realise you don’t have any critical illness cover and are leaving you and your family exposed if you experienced a serious health setback. Or you could review your savings and realise you’re not making the most of your potential tax-free returns through the various ISA products available.

Whatever your particular situation, maybe it’s worth booking yourself in for a financial MOT to make sure your finances are fit for your current circumstances.

The programme doesn’t include self-employed workers however, and although there is a background of increased numbers of savers, in reality, the average private sector worker’s pension contribution is dropping. In 2017, the average contribution was at £3,873 – down from £6,782 in 2012. Being realistic about what you’re saving and what you’re able to save is important; we’ll always be able to find something we’d rather spend on our money on in the here and now, but to guarantee ourselves a comfortable retirement, the earlier we start putting our funds aside the better.

Avoid ‘squanderlust’ at the airport
The shops and cafes in departure lounges know they’ve got a captive audience but do try and resist the temptation to go on a spending frenzy as you while away the time before your flight. Research shows that a third of Britons admit to blowing any leftover cash at the airport once a holiday ends. So take time to consider whether you really need a pair of overpriced gold flip flops. Is that bottle of bizarrely coloured liqueur truly an amazing offer or is it going to languish at the back of your drinks cabinet once you get home?

Book in advance
Pre-book as much as you can before you go to save time and money. Not only can you get excited at planning all your excursions in advance, it is much cheaper and you can enjoy a sense of satisfaction as you bypass all the queues. Hiring a car is usually cheaper if you do it in advance, so take advantage of all the comparison websites online to find the best deal.

Pay it forward
You’ll have seen the charity collections at the airports for unwanted currency. With 86% of Britons admitting to having leftover change, it’s a nice gesture to donate any change that’s just going to gather dust at home, before leaving the country. Figures show people have an average £36 of leftover currency. Of course, you could save it for your next trip, provided of course you’ll remember where you put it, but if you’ve enjoyed your well-earned break, why not pay it forward?

Renting needn’t be forever, and for some people it’s a great opportunity to stop and think about your next move. It can give you time to really look at the options out there if you intend to get back on the housing ladder. Your requirements will change as you grow older and downsizing can be a great idea for some. Before you find the perfect property which will suit your needs going forward, renting gives you the chance to release some capital and decide what to do with it.

It’s worth bearing in mind, though, that by selling up and moving into private rented accommodation, your estate could receive a higher IHT bill. The inheritance tax exemption introduced in 2017 allows parents and grandparents an additional IHT allowance when their children or grandchildren inherit their main home, and so selling your home could remove your eligibility for the exemption.

If you have any questions around this topic, please feel free to get in touch with us directly.

One way some families are funding the cost of care is through the value of their home; equity release or a lifetime mortgage, as it is sometimes known. This allows anyone over 55 to borrow against the value of their home. You can draw money to about 50% of your property’s value and there are no monthly repayments. The interest rolls up at a compound rate until the person borrowing the amount dies. To protect you, the total debt can never exceed the value of your home and will be cleared from the eventual sale of the property.

It’s worth noting that interest rates tend to be higher than standard mortgages but there are no affordability checks or repayment plans. You can decide whether you take the money as a lump sum or in stages.

There are different ways of using equity release. Most people would prefer to stay in their own home for as long as possible rather than move into a home, so one option can be to use the money to make home improvements and adapt the property to their needs as they grow older. Installing a wet room or a moving a bathroom downstairs, for example, can often be practical solutions.

It is more difficult to use equity release to fund care home costs. In fact, according to a Daily Telegraph survey in 2017, only 1% of respondents gave that as a reason, compared with debt repayment, inheritance gifts, home improvements or to boost disposable income. The complexity stems from the fact that the repayment of the loan is often triggered by the very act of someone moving into long-term care. If one half of a couple, however, needed to go into a care home, it does mean that the property would not need to be sold to repay the debt until their partner died or moved into the home with them.

It’s obviously difficult to predict the length of someone’s stay in a care home so equity release may not always be a straightforward decision but, in some cases, it can be a useful option for quick, upfront funding.

Contactless is coming; in fact in Sweden, for example, there are stores that are already refusing to accept notes and coins. Balance to balance transfers through mobile phones are also gradually being adopted in developing countries. From the government’s standpoint, the anonymity that physical cash provides is a drawback, as it can unfortunately be used as a cover for tax evasion and crime, so we can expect regulated contactless technology to be encouraged at all levels.

Of course there are people who hold concerns about the direction things are heading in. Mattias Skarec, a Swedish Digital Security Consultant, points out that no technology-based system is invulnerable to glitches and fraud. “We are naive to think we can abandon cash completely and rely on technology instead.” Speaking of problems with card payments that two Swedish banks have experienced during the last year, he states, “We are lucky that the people who know how to hack into them are on the good side, for now.” However, “we don’t know how things will progress. It’s not that easy to attack devices today, but maybe it will become easier in the future.”

As with any new development, it’s a case of balancing any disadvantages with the potential it offers. Meanwhile, dream of what a brave new world could bring you…

Around 60 per cent of people using lifetime mortgages put the money towards home renovations, to increase the value of the estate. Legal and General even offer a trial ‘property refurbishment’ equity release plan, that has just been extended from the capital to several towns and cities around the UK. This plan determines the amount you can borrow by the projected value of the home once the renovations are complete, and is particularly useful for those living in homes in need of repair who are considered ‘equity rich’.

2. Picking a protective plan

Plans are available which shield a portion of your home’s value from your equity release lender. This means you can guarantee that if that portion remains untouched, it can be passed on to your descendants. Plans with ‘inheritance protection’ are widely available; where a typical plan would allow a maximum of a 35 per cent equity release, these would allow you to release half of that amount.

3. Release ‘gifts’ to mitigate IHT

Any financial gift that is given to your descendants will be exempt from tax if you live for seven years. If you’re in good health, you can use equity release to reduce your ‘death tax’ or even bring you below the taxable threshold if you are near the IHT margin. For example, you could support a relative who needs help with their housing deposit, or clear their mortgage now to avoid inheritance tax later. Of course, this comes with its risks as dying within the seven year time limit will bring about an unexpected tax bill for the recipient and in those seven years the interest accrued could wipe out the IHT saving.

Equity release is not right for everyone – if you have any questions around this topic, please feel free to get in touch directly.

Secondly, work can be a great contributor to stress, creating hypertension which is in turn a huge risk factor for potentially fatal conditions. In the study, retirees were shown to be significantly less likely to fall victim to cardiovascular diseases or strokes.

Of course, there can be benefits to staying in work too. Participating in a work environment is a good way of keeping your mind and body active. On top of that, being part of a team helps develop and maintain a sense of purpose and belonging that is essential to cognitive health and development.

That’s not to say that all these benefits can’t be achieved outside of work; the key is to find a hobby, interest or cause to involve yourself in. As is so often the case, there’s no single solution. It’s important to find the best path for you, whether that’s staying in work, retiring early or going part-time. Whatever you choose, spend your time wisely as it could have a major impact on how long your retirement turns out to be.