TAX IN UNCERTAIN TIMES Key !inancial changes that have a"ected millions of people from April SCAMMERS’ ‘SOCIALLY ENGINEER’ VICTIMS 17% increase in suspicious or scam-related activity RETIREMENT NEST EGG Half of over-50s regret not saving into their pension earlier FED UP WITH YOUR NINE! TO!FIVE? SIXTY THE MOST POPULAR AGE TO RETIRE EARLY MAY/JUNE 2022 Welcome to our latest edition. Are you fed up with your nine-to-!ive? There are many factors that can in!luence when someone decides to retire. For some, it may be based on health reasons, while others may want to take advantage of government bene!its or simply enjoy a more relaxed lifestyle. However, one of the most common factors that determines when people choose to retire is their age. On page 12 we look at what is the most popular age to retire early. New research reveals the key steps people have taken to embrace early retirement and examines the costs and bene!its of doing so. Most taxpayers started to see their tax bills increase from April 2022. As we move into the new 2022/23 tax year, now is the time to review your tax a"airs to ensure that you have taken advantage of all reliefs available and have considered some planning opportunities to help reduce your tax liabilities. On page 06 we explain what changed at the beginning of the 2022/23 tax year, and what you need to be aware of. Any of us can fall victim to a scam. Scams are increasingly common and many people are caught out. They can be very distressing, and the impact is often emotional as well as !inancial. If you’ve been the victim of a scam, remember that you’re not alone. Turn to page 11 to read how increasingly scammers are relying on our psychological biases to trick us into handing over important data, !inancial information and our money. The days of working for a single employer for your entire career and retiring with a comfortable pension are largely gone. The responsibility for accumulating a retirement nest egg now rests with individuals as opposed to their employers. Saving enough for retirement is challenging for many people, but an era of changing demographic trends, such as increased longevity and delayed marriage, can make this journey even more di#icult. Read the full article on page 24. A full list of the articles featured in this issue appears opposite. INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE. THE VALUE OF INVESTMENTS MAY GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED. INSIDE THIS ISSUE MAY/JUNE 2022 The content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. Past performance is not a reliable indicator of future results. The Financial Conduct Authority does not regulate tax advice or Wills. CONTENTS 04 MILLIONS OF MIDLIFERS ARE PROPPING UP THEIR FAMILIES Impact on work, wealth and wellbeing putting further pressure on age group 05 PASSING ON WEALTH TO THE NEXT GENERATION 30 million parents want to leave wealth in their Will 06 TAX IN UNCERTAIN TIMES Key !inancial changes that have a"ected millions of people form April 07 MORE BRITONS INSURE THEIR HOMES THAN THEIR LIVES Ensure your !inancial security for when you might need it most 08 DEALING WITH DIVORCE Revolution to family law !inally removes the need for blame as a basis for divorce 09 GENDER PENSION GAP WIDENS Women have lower pension pot sizes in every age bracket 10 FUTURE WEALTH The average British child is worth just under £5,000 by the time they reach school 11 SCAMMERS ‘SOCIALLY ENGINEER’ VICTIMS 17% increase in suspicious or scam- related activity NEED FURTHER GUIDANCE TO HELP CHART YOUR PATH THROUGH LIFE? We know you’ll have di!ferent priorities for your wealth at di!ferent points in your life. Whatever your !inancial aims, we can help you achieve them. For more information or to discuss your situation, please contact us. We hope you enjoy reading this issue. C O N T E N T S 12 FED UP WITH YOUR NINE!TO!FIVE? Sixty the most popular age to retire early 14 PRIVATE WEALTH Millions struggle to understand their most important source of income in retirement 15 ‘HOME IS MY PENSION’ GENERATION 22% rise in people using property to support their retirement 16 PROTECTING FAMILY WEALTH What will your legacy look like? 17 LOVE AND MONEY Couples reveal they’re poles apart 18 BUILDING AN INVESTMENT PORTFOLIO 4 steps for future wealth creation in your mid-20s to mid-30s 20 HOW TO COPE WITH THE RISING COST OF LIVING 9 in 10 adults make stark spending decisions as anxiety runs high 22 WHERE THERE’S A WILL THERE’S A GEN ZER 20% of 18 to 24 year-olds emerge as Will makers 23 DISCUSSING INHERITANCE WITH YOUR HEIRS More than half of UK adults haven’t discussed the subject 24 RETIREMENT NEST EGG Nearly a half of over-50s regret not saving into their pension earlier 04 FINANCIAL PLANNING IMPACT ON WORK, WEALTH AND WELLBEING PUTTING FURTHER PRESSURE ON AGE GROUP The "inancial decisions made by individuals as they reach retirement could have signi"icant consequences on their "inances and standards of living. Midlifers (people aged 40 to 60) are facing a challenging backdrop, with rising in!lation and increasing energy bills putting further pressure on an age group that is already juggling multiple headwinds. Midlifers spend £10 billion a year in !inancial help for loved ones, while support costs have risen by £300 annually over the last 15 years. According to new analysis[1], responsibility peaks at the age of 45, with midlifers having the greatest level of !inancial responsibility at this stage of their life. GREATER PRESSURE Unpaid caring responsibility also becomes more common from the age of 58, meaning many 40$60-year-olds are struggling to juggle their responsibilities. Many midlifers already feel the level of support they provide is unsustainable (10%). With in!lation set to continue to rise throughout 2022, energy prices reaching record highs and an increase to National Insurance, this support will be under even greater pressure[2]. FINANCIAL SUPPORT The study examined the unique challenges faced by those in midlife and the impact of these on people’s work, wealth and wellbeing. It !inds that millions of midlifers are propping up their families, with more than six million people aged 40 to 60 (33%) currently providing !inancial support or unpaid care to at least one loved one, on top of their job and other family commitments. More than one in six (17%) people in midlife provide !inancial support to an adult in their life, such as an elderly parent or grown-up child, at a collective cost of £10.4 billion a year. Those supporting adult children will spend an average of £247 a month, whereas midlifers who provide !inancial support to an elderly parent or relative will spend an average of £282 a month, in addition to their own household expenses. TIME PRESSURES Alongside !inancial support, those aged 40 to 60 are also relied on to provide unpaid care (15%) to elderly relatives or childcare for grandchildren while also juggling their lives and careers. The average amount of time taken up by unpaid care is the equivalent to a part-time job, at nearly 15 hours a week. As a result of these time pressures, one in four people in midlife (25%) get less than an hour to themselves in the average day and one in !ive (19%) spend no time on their !inancial wellbeing. MIDLIFE SPENDING The !inancial and caring commitments required of people in midlife have already increased in recent years. Based on analysis of ONS data, spending in areas that includes support for other generations has increased by £300 in the last 15 years, placing further pressure on this age group[3]. The COVID$19 pandemic has increased this further, with those in midlife spending more time and money supporting their loved ones. Just over half (52%) of 40$60-year-olds in the UK have seen their !inancial pressures grow, while 34% say that it has increased the time pressure they face. „ Source data: [1] Opinium survey of 4,009 UK adults aged between 40 and 60 years old in the UK was conducted between 28 December and 6 January 2021 [2] Rising cost of living in the UK, House of Commons library [3] Opinium analysed data from the ONS to look at the most relevant spending amongst households where the household reference person is closest to our midlife cohort (in this case 50!64). The trends from the ONS Family Spending series indicates that spending on areas such as health and education, which are some of the main areas of spend for those providing care or "inancial support, is approximately £300 higher than it was for households where the household reference person is a midlifer compared to 15 years ago. LOOKING TO GROW YOUR WEALTH? Time to create a personal !inancial plan tailored to your needs and goals? We’ll work together to develop wealth-building strategies that focus on what’s important to you, your needs and those of your loved ones. To discuss your requirements, speak to us to !ind out how we can help you. MILLIONS OF MIDLIFERS ARE PROPPING UP THEIR FAMILIES 30 MILLION PARENTS WANT TO LEAVE WEALTH IN THEIR WILL Millions of Britons say they want to plan to pass on wealth to their children and grandchildren in a Will – but fewer than half have written one, according to new research[1]. Failing to plan to write a Will or complete estate planning could potentially lead to a signi!icant Inheritance Tax (commonly called IHT for short) bill being levied on a person’s estate when they die. ANYTHING THAT ISN’T EXEMPT WILL BE TAXED IHT is a tax that may be paid on your estate (your money, possessions and your share of any property) when you die, reducing how much value will ultimately pass to your bene!iciaries. The starting point for IHT in the current 2022/23 tax year is £325,000. When the value of an estate exceeds this amount, anything that isn’t exempt will be taxed at 40%. The tax year runs from 6 April to the following 5 April. So, the tax year 2022/23 started on 6 April 2022 and !inishes on 5 April 2023. RISING NUMBER OF PEOPLE COULD UNEXPECTEDLY FACE IHT BILLS Recent rises in houses prices mean the estates of a rising number of people could unexpectedly face IHT bills. The research found that 30 million (88%) people with children say they plan to leave money to their children and/ or grandchildren in their Will but only 41% have written one. Twenty million (59%) parents do not currently have a Will. Although over half (57%) of people with children are considering seeking professional !inancial advice about the best way to pass on wealth, only 13% have done so. More than half (56%) of people with children say they are considering writing wealth into trust but only 12% have actually done so. HOW PARENTS PLAN TO PASS ON WEALTH „Leaving it in a Will 88% „Bank transfer/cash 67% „Consulting !inancial adviser 57% „Writing wealth into trust 56% „Putting money into investment 53% „ Putting money into a pension for their children 43% MINIMISING THE AMOUNT OF IHT YOU COULD BE LIABLE FOR The research identi!ied that mass a!!luent consumers – those with assets of between £100,000 and £500,000 excluding property – are more likely to have their a!fairs in place to pass on an inheritance. More than half (51%) of mass a!!luent parents have a Will in place. 20% of mass a!!luent parents have put money into an investment for their children or grandchildren (compared to 12% of all parents). 17% of mass a#luent parents have obtained professional !inancial advice to discuss the best way to pass on wealth. And 13% of mass a#luent parents have written wealth into trust for their children. The average amount written into a trust was £184,000 while more than one in !ive (21%) wrote more than £250,000 into a trust. „ Source data: [1] LV= surveyed 4,000 nationally representative UK adults (of which at least 500 were mass a#luent) via an online omnibus conducted by Opinium in December 2021. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE. PASSING ON WEALTH TO THE NEXT GENERATION HOW WILL I PASS ON MY ESTATE EFFICIENTLY? Tax rules depend on individual circumstances and may change. You should always obtain professional !inancial advice for more information on tax. We provide all the elements you need to protect, grow and pass on your wealth. To discuss your plans or for further information, please contact us. INHERITANCE TAX 05 KEY FINANCIAL CHANGES THAT HAVE AFFECTED MILLIONS OF PEOPLE FROM APRIL Most taxpayers started to see their tax bills increase from April 2022. As we move into the new 2022/23 tax year, now is the time to review your tax a"airs to ensure that you have taken advantage of all reliefs available and have considered some planning opportunities to help reduce your tax liabilities. Here’s what changed at the beginning of the 2022/23 tax year, and what you need to be aware of. NATIONAL INSURANCE INCREASE From 6 April, National Insurance increased by 1.25%. That’s an increased cost of £255 for those earning £30,000, or £505 for those earning £50,000. The National Insurance threshold increased to £9,880 per year, meaning you don’t pay National Insurance if you earn below that level. This means you pay National Insurance at a rate of 13.25% on earnings between £9,880 and £50,270 per year, and 3.25% on earnings above £50,270 a year. In July 2022, the National Insurance threshold will increase again so that you only start paying National Insurance on earnings above £12,570. This means the threshold will align with the personal allowance. You will pay National Insurance at a rate of 13.25% on earnings between £12,570 and £50,270 per year, and 3.25% on earnings above £50,270 a year. There’s been a similar rise for employers’ National Insurance. One way to help to mitigate it is to consider salary sacri!ice schemes for pensions and other bene!its, which allow you to take some of your bene!its before your salary is paid, essentially avoiding National Insurance on these items. STATE PENSION State Pension payments increased by 3.1% to align with in!lation in the year to September 2021. The full new State Pension increased to £185.15 a week. Full basic State Pension payouts rise to £141.85 a week. RISE IN DIVIDEND TAX RATES The dividend tax rates vary depending on your income. Dividend tax is payable on earnings from dividends above £2,000 a year. If you are a self-employed director of a company and pay yourself with a combination of tax and dividends, this will a"ect you too. If you have shares outside of an Individual Savings Account (ISA) or pension, you may end up paying more tax on the income from them. From April 2022, the dividend tax rates increased by 1.25%. This means the dividend tax rates are 8.75% for basic rate taxpayers; 33.75% for higher rate taxpayers; and 39.35% for additional rate taxpayers. NATIONAL LIVING WAGE INCREASE For those on lower incomes, and their employers, an increase in the National Living Wage of 6.6%. The living wage for workers over 23 increased to £9.50 an hour, while for under-18s and apprentices it is £4.81, £6.83 for 18$20-year-olds and £9.18 for 20$21-year-olds. FROZEN THRESHOLDS The Chancellor often uses a new tax year to update the thresholds for basic rate tax, higher rate tax, stamp duty and other taxes in line with in!lation. This year, nearly all will be frozen, meaning that most of us are worse o!f in real terms. The personal allowance (the amount most of us can earn without paying tax) remains at £12,570, and the threshold for paying higher rate tax remains at £50,271. From earnings of £100,000, the personal allowance begins to be withdrawn, and the additional rate threshold remains at £150,000. Freezing thresholds contributes to something called ‘!iscal drag’, which means that, as wages rise, more people are subject to higher rate tax because the threshold doesn’t keep pace with the rises. HIGHER COUNCIL TAX Councils were permitted to raise your tax rates by up to 3% from April, with prices up by a quarter in the past decade. Those in bands D and above receive a £150 tax rebate, aimed at dealing with higher energy prices, while those in bands E and below will have no recourse to this. CHILD BENEFIT Child Bene!it payments increased in line with in!lation of 3.1% in line with other bene!its. This means that parents will be able to receive £21.80 a week for their eldest or only child and £14.45 a week for any additional children. This works out at £1,133.60 a year for one child, and £751.40 a year for subsequent children. If one parent in your household earns more than £50,000, they have to start paying the Child Bene!it back through their tax return. Once they earn more than £60,000 they have to pay all the Child Bene!it back. HIGHER ENERGY PRICES Although the change in the energy cap is not pegged to the tax year, for most of us our energy bills will go up at roughly the same time. Unless you are on a !ixed rate for energy, the capped amount your provider can charge for energy increased by 54% from 1 April. „ TIME TO TAKE A FRESH LOOK AT YOUR FINANCES? It can be di!!icult to stay on top of the key tax rates and allowances amid day-to-day living. With taxes increasing from April 2022, you need to consider what steps you can take from a tax planning perspective to maximise tax reliefs that are available in the 2022/23 tax year. We look at your wealth and tax planning as a whole. To !ind out more, please contact us for more information. TAX IN UNCERTAIN TIMES 06 TAX PLANNING ENSURE YOUR FINANCIAL SECURITY FOR WHEN YOU MIGHT NEED IT MOST There are a number of reasons why you might need life cover and critical illness cover. If you have dependents, then it is important to make sure that they will be !inancially secure if something happens to you. If you have a mortgage or other debts, then life cover can help to pay these o!f. Critical illness cover can provide you with a lump sum of money if you are diagnosed with a speci!ied serious illness, which can help to cover the cost of treatment and make sure that you and your family are !inancially secure. NOT SO KEEN TO INSURE OUR OWN LIVES But, according to new research[1], only 32% of people in the UK have life insurance compared to 64% who have taken out an insurance policy to cover their homes. Showing that there is still some truth in the old adage ‘An Englishman’s home is his castle’, it would seem some people place more importance on insuring their homes than their lives. The !igures reveal that whilst we’re happy to protect our latest iPhone purchase (14%), our upcoming holiday from the unpredictability of COVID (21%) and our furry four-legged friends (19%), we’re not so keen to insure our own lives to protect our loved ones. RELUCTANT TO THINK ABOUT OUR OWN MORTALITY Indeed, 66% of people aged over 35 do not have life insurance cover, and a further 84% do not have critical illness cover. Whilst 58% of people with pet insurance and 47% with mobile phone insurance have not taken out life insurance. It is not unusual for people to be reluctant to think about their own mortality, especially younger people in their 30s and 40s. However, it is important for people during the accumulation phase of their lives, which is generally those under 50, to think about protecting their !inancial journey. TRANSFER RISK TO AN INSURANCE PROVIDER Taking out life insurance and critical illness cover can help to transfer risk to an insurance provider. It is a way to help protect the journey towards meeting your !inancial goals. Almost a !ifth of the respondents (19%) who have life insurance in place said they do not have, or they are not con!ident that they have, su#icient life insurance to pay o" their debts and provide for their dependents should the worst happen. PROTECT YOUR FAMILY OR OTHER LOVED ONES Less than half (45%) of those polled say their existing life insurance policy will cover their mortgage and only a quarter (24%) say it would cover their current salary. A further 15% say it will only cover the basic cost of living for their dependents, 4% realised that their current policy covers a previous salary which is lower than their current earnings, and 20% admit they simply don’t know how much their life insurance would cover. Whether it’s to protect your family or other loved ones, it is important to take professional advice and make a plan, which can be reviewed regularly, to ensure that the people that matter to you are taken care of and that your !inancial goals can be achieved. „ Source data: [1] The research of 1,000 nationally representative UK adults was commissioned by Find Out Now in November 2021 on behalf of Brewin Dolphin. MAKE SURE YOUR LOVED ONES ARE LOOKED AFTER, SHOULD THE WORST HAPPEN We’re here to help you protect your loved ones today, so you don’t have to worry about tomorrow. To discuss your plans or for further information, please contact us. MORE BRITONS INSURE THEIR HOMES THAN THEIR LIVES PROTECTION 07 REVOLUTION IN FAMILY LAW FINALLY REMOVES THE NEED FOR BLAME AS A BASIS FOR DIVORCE No one enters into marriage expecting it to end in divorce. However, for many couples, divorce is the sad reality. If you are facing divorce, it is important to know that you are not alone. Each year, thousands of people go through the divorce process. While divorce can be a di#icult and emotionally charged time, there are things you can do to make the process go more smoothly when important decisions need to be made. Keeping a level head to negotiate a fair !inancial settlement is vital. NO!FAULT DIVORCE REMOVING THE NEED FOR BLAME From 6 April 2022 no-fault divorce came into e"ect in England and Wales. This is a long-awaited revolution to family law, !inally removing the need for blame as a basis for divorce. Now the only ground for divorce is that the marriage has ‘irretrievably broken down’. This means the law no longer requires blame to be apportioned, neither is there any requirement to !it your particular circumstances into one of the !ive facts that you previously had to prove, i.e. there is no need to cite behaviour or adultery nor wait for the minimum two-year separation period. MORE AMICABLE RESOLUTIONS FOR PARTIES In addition, further crucial changes are that the respondent to the divorce is now unable to contest the divorce (the limited grounds to challenge a divorce relate to jurisdictional grounds or validity of marriage). If you and the other party both agree the marriage has broken down irretrievably, then a joint application for divorce can now be made. IF YOU FIND YOURSELF IN THIS SITUATION, HERE ARE 5 POINTS TO CONSIDER 1. SEEK PROFESSIONAL ADVICE IMMEDIATELY Seek legal and separate !inancial advice immediately. Your professional !inancial adviser can help you draw up a list of joint and personal assets and valuations, so any legal advice you seek is based on accurate information. This can make an appointment with your solicitor more time and cost e"ective. You’ll need to draw up a list of assets e.g. !irst or second homes, pension pots, investments, value of any businesses etc., checking when they were purchased and !inding out if they should fall into the category of marital assets. In addition, list all your outgoings both joint and individual. 2. CANCEL ALL SHARED FINANCES Cancel any !inancial commitments that might be in a joint name immediately. The more unscrupulous partner could take advantage otherwise and saddle you with debt you are liable for. So cancel credit cards, joint accounts, personal loans and even overdrafts if possible and set up afresh in your own name. 3. TIMING IS EVERYTHING Although it may be the last thing on your mind, choosing the right time of year to divorce could signi!icantly impact on the !inancial outcome for each individual. When a marriage or registered civil partnership breaks down, it is likely that tax will not be at the top of the agenda. Your tax position refers to the amount of Income Tax and Capital Gains Tax you’ll need to pay. During the divorce process, there is a window of time where a spousal exemption applies and then drops o". 4. SPLITTING PENSIONS When it comes to pensions, !inding a way to achieve a clean break so you are not tethered to your partner forever is key. What can be divided depends on where in the UK you are divorcing. In England, Wales and Northern Ireland the total value of the pensions you have each built up is taken into account, excluding the basic State Pension. In Scotland, only the value of the pensions you have both built up during your marriage or registered civil partnership is considered. Normally, anything built up before you married or after your ‘date of separation’ does not count. There are two main ways of dealing with pensions at divorce that apply across the UK. 1. Pension sharing is often the favoured way of dividing a retirement fund because it achieves a ‘clean break’. This involves couples splitting one or more pensions. The aim is to ensure that the future incomes of both spouses are equalised. Your professional !inancial adviser will be able to help you implement any pension sharing order after the splitting process is complete. 2. The second option, pension o"setting, sees pension rights balanced against other assets, such as the home. Typically, if one spouse has a pension fund worth £500,000 and the couple jointly own a property worth £500,000, one may keep the property and the other keep the pension – though things are rarely that simple, so professional advice is key. 5. BUDGET FOR YOUR FUTURE Whatever happens, your life is going to be very di"erent once the divorce is complete so it’s important to budget for the future life you want to live. Obtaining a copy of your credit report is a good start, so you know what your standing is, especially as many people will need to think about a new mortgage after divorce. A credit report will also highlight any joint lending you might be liable for. „ FINANCIAL PLANNING FOR DIVORCE # WHAT DO YOU NEED TO KNOW? Obtaining professional !inancial advice can be invaluable in guiding you through the myriad !inancial decisions from valuing and splitting pensions, !inancial disclosure and income planning, to valuing investments, managing tax and implementing court decisions to get your !inances back on a sound footing. To discuss your options, please contact us. DEALING WITH DIVORCE 08 FINANCIAL PLANNING WOMEN HAVE LOWER PENSION POT SIZES IN EVERY AGE BRACKET The staggering impact of the gender pension gap has been revealed in new research[1] which shows that women have lower pension pot sizes in every age bracket, with the situation signi!icantly deteriorating as they approach retirement. Worryingly, women on average retire with less than half the income of men. GENDER PENSION GAP BY PENSION CONTRIBUTIONS Age Gap in pension contributions 20$24 13% 25$29 16% 30$34 15% 35$39 18% 40$44 23% 45$49 29% 50$54 35% 55$59 40% 60$64 45% 65$69 49% REDUCTION IN CONTRIBUTIONS PAID INTO PENSIONS The amount paid in contributions has a big impact on what is received at retirement and the di"erence between men’s and women’s contribution rates is stark. For most people, the e"ect of working part-time means a reduction in contributions paid into their pension. If a person opts to reduce their full-time working hours to three days a week, they might expect their pay and their pension contributions to reduce by 40%. However, because of auto- enrolment (AE) thresholds, the impact could be greater than that. GOOD FINANCIAL PLANNING A person earning £30,000 opting to reduce their hours by 40% would see their pay reduce by 40%. However, because of the lower qualifying earnings threshold (LET) under AE, their pension contributions would reduce to around 50% of their full-time value. A worker earning £20,000 would see their pension contributions reduce by over 58%. Pension contributions are unlikely to be a deciding factor when considering whether to work part-time. What is important is that people understand the long-term impact on their pension when they are making that decision. This is crucial to good !inancial planning. UPPING PENSION CONTRIBUTIONS Some people might consider upping their pension contributions, but this would have to be carefully balanced against disposable income. Another option some parents may consider is sharing the caring responsibilities to help spread the long-term !inancial impact. One signi!icant change to help women in this position would be to remove the LET. It has the potential for the biggest impact on closing the gender pension gap and has been promised by government for the ‘mid-2020s’. HOW TO HELP CLOSE THE GENDER PENSION GAP „ If you are working part-time and are automatically enrolled into a workplace pension scheme, consider increasing your monthly contributions, if it is a!fordable. „ If you earn less than £10,000 per year, speak to your employer about your options for joining your company pension scheme. „ If you are thinking about reducing your working hours to help balance family life, you might want to consider whether it is better for you or your partner to work part-time. As part of those considerations, you might want to look at which of you gets higher employer pension contributions. „When it comes to saving into a pension, starting early allows a small contribution to build up over time. „ For those in a long-term relationship, have a stake in your !inances. Should divorce ever come into the picture, keep pensions at the forefront of your mind when splitting assets. „Check your National Insurance record to see if you will get the full State Pension amount when you retire. You need a total of 35 years of National Insurance contributions, or, in some cases, you can apply for credits. If it looks like you might be short, you might have the option to pay to !ill in the gaps. „Apply for Child Bene!it even if your overall household income means you need to pay it back through a high-income Child Bene!it charge. If you are not working while looking after a child you get State Pension credits automatically until your youngest child is 12 years old as long as you are claiming Child Bene!it. If you do not claim Child Bene!it you do not receive the credits. „ Talk to your employer about the policies they o"er. Source data: [1] Aviva Workplace Pension Data: Percentage di$erence in mean total contributions paid in January 2022, men versus women, by age group, based on a sample of 2,073,000 workplace pension plans receiving contributions in the month. TIME TO BOOST YOUR RETIREMENT SAVINGS? Whatever retirement means to you, we’re here to help you establish a !inancial plan for the lifestyle you want. To ensure your plans stay on track or for more information, please contact us. GENDER PENSION GAP WIDENS RETIREMENT 09 THE AVERAGE BRITISH CHILD IS WORTH JUST UNDER £5,000 BY THE TIME THEY REACH SCHOOL When we talk about the Bank of Mum and Dad, we are e"ectively talking about handing money over to your children. There are many reasons why your descendants might look to you for !inancial support, and many routes you could take in funding them, if you so choose. All children, regardless of means, bene!it from learning simple concepts like saving to attain goals and operating within a budget. That can start with pocket money for non-essentials and mature into allowing teenage children to manage their own clothing budget or take control of a portion of the family’s charitable donations. You may even want to allow older teens to allocate and manage a small portfolio for exposure to investments. CHILDREN’S KEY LIFE MOMENTS A nationwide survey[1] of parents has revealed the wealth that average British children have accumulated by the time they reach adulthood, with the average UK child having amassed just under £5,000 by the time they reach school at the age of !ive, just over £10,000 by the age of 18 and £12,000 by the time of their 21st birthday. The majority of UK parents surveyed said they began saving for their children’s key life moments when they were !ive years old, with 27% saying they started before their child reached their !irst birthday and 15% even admitting they began before their child was even conceived! MAKING THEIR OWN MONEY The !indings revealed that £125 a month was the average amount that parents put aside for their child’s future each month. 39% of those who responded said they feel it is the duty of every parent to save for their children, whilst 55% believe it is their duty but admit they can struggle with the obligation. One in 20 (6%) insist their children should make their own money and their own way in life, without assistance from their parents. BEST POSSIBLE START IN LIFE Everyone wants to do right by their child but we appreciate it’s not always easy. Instead of large presents on birthdays or at Christmas, consider using part of the budget to save for their future. The majority of parents want to give their child the best possible start in life, but what are the best ways to invest for children? Some ways of passing money on to your children can start very early, including putting money into a Junior Individual Savings Account (JISA) for your child. HELPING THE YOUNGER GENERATION The current annual allowance for contributions is £9,000 (tax year 2022/23), meaning that if you start paying into a JISA when your child is young, they could !ind themselves with a sizeable sum of money by the age of 18. Focusing on later life stages, some parents might also consider contributing to their children’s pension pots. Covering school fees and other expenses for grandchildren is another possible way to help out younger generations !inancially. But with house prices at historically high levels, the most common ‘Bank of Mum and Dad’ queries we receive concern helping the younger generation onto the property ladder. „ THE VALUE OF INVESTMENTS CAN FALL AS WELL AS RISE AND YOU COULD GET BACK LESS THAN YOU INVEST. IF YOU’RE NOT SURE ABOUT INVESTING, SEEK PROFESSIONAL ADVICE. Source data: [1] The research of 1,500 parents with dependents currently living at home with their parents, was commissioned by Perspectus Global in March 2021 on behalf of Brewin Dolphin. BUILDING UP A SAVINGS POT Putting money aside for a child is a great way to prepare them for their future, and can also teach valuable lessons about their managing their !inances. To discuss how we could help you make their savings work harder, please contact us for more information. FUTURE WEALTH 10 SAVINGS 17% INCREASE IN SUSPICIOUS OR SCAM$RELATED ACTIVITY Any of us can fall victim to a scam. Scams are increasingly common and many people are caught out. They can be very distressing, and the impact is often emotional as well as !inancial. If you’ve been the victim of a scam, remember that you’re not alone Increasingly, scammers are relying on our psychological biases to trick us into handing over important data, !inancial information and our money. There are a growing number of scams that are harder to identify, with scammers using increasingly complex psychological tactics to ‘socially engineer’ their victims into handing over personal data or money. Would-be investors are vulnerable to manipulation from scammers when put under time pressure, promised greater returns on investments or contacted by what they think is an authority !igure. Research highlights the psychological tricks that scammers use, as data shows a 17% rise in reported scams[1]. The data highlights that almost three-quarters of Britons have seen an increase in suspicious activity and of those who were scammed nearly four in ten (39%) didn’t report it. Criminals carrying out scams usually apply pressure tactics, illusions of scarcity or pretending to be a trusted authority to ‘socially engineer’ their victims. The !indings come as consumer polling shows that seven in ten Britons claim to have seen an increase in suspicious or scam- related activity, but almost a third of respondents (31%) admit they wouldn’t know what to do if they found themselves in that position. PURCHASE SCAMS Purchase scams, where people buy goods online which don’t exist or never arrive, accounted for over half (53%) of reported scams – with an average value of £980. Scammers create a perceived scarcity and therefore ‘value’ in what they are selling to motivate consumers to act quickly and not rely on their better judgment. This might be advertising something as a ‘one-time o"er’, a limited edition price or availability, or rushing us into buying something that ‘has’ to be bought now – even if you’ve never seen the product in real life. You should never be rushed; it’s always important to take the time to check before proceeding with a purchase. If it’s a big-ticket item like a car, unless you’re buying directly through a well-known brand, it’s good practice to see it in person before spending any money. IMPERSONATION SCAMS Over two-thirds of Britons (64%) would be more likely to comply with a request if they believed it was coming from an institution they knew, such as their bank, the police or even the NHS. It’s not surprising, therefore, that scammers exploit this insight. In these situations, scammers will harness that sense of authority to instil fear in their victims – perhaps suggesting their bank account has been compromised, a payment is overdue or that they will be !ined if they do not pay the full amount. Psychologically, many of us will take these at face-value if they’re coming from what we believe to be a reputable institution. Real phone calls from a bank will never ask customers to do things like share their PIN/ security information or to transfer money to a ‘safe account’. INVESTMENT SCAMS Investment scams often account for the highest average value type of scam, which is why they’re such enticing options for fraudsters – with £15,788 lost on average to these types of scams in the last quarter. Investing should generally be a very measured activity and people who are looking to invest their money will often do a lot of research before making their decision, or at least ask for a second opinion. However, scammers are experts at exploiting the fact that people want to grow their assets, and that we can sometimes put our better judgement aside for a high return opportunity. Worryingly, this is re!lected in the research, with three in ten (32%) admitting they would be willing to go with an investment or savings provider they’d never heard of if they thought the returns would be higher than those of their existing provider. A further !ifth (21%) stated they were unsure, indicating they could potentially be convinced. Check the Financial Conduct Authority (FCA) website and its warning list (https://www. fca.org.uk/scamsmart/warning-list) for cloned companies to make sure you’re dealing with a genuine company. If you have any suspicions, talk to someone you trust and don’t ignore your concerns. It’s important to ask questions and make sure you feel comfortable in the choices you are making – and remember, if the returns seem too good to be true, they probably are. „ Source data: [1] Barclays data on reported scams from October 2021 – December 2021. Mortar Research study of 2,002 participants, January 2022. WE’RE HERE TO HELP YOU If you would like to speak to us about any concerns you may have, we’re here to listen to you. To !ind out more or to discuss your situation, please contact us. SCAMMERS ‘SOCIALLY ENGINEER’ VICTIMS PROTECTION 11 12 RETIREMENT FED UP WITH YOUR NINE$ TO$FIVE? SIXTY THE MOST POPULAR AGE TO RETIRE EARLY There are many factors that can in"luence when someone decides to retire. For some, it may be based on health reasons, while others may want to take advantage of government bene!its or simply enjoy a more relaxed lifestyle. However, one of the most common factors that determines when people choose to retire is their age. /// WHEN I T COMES TO THEIR HEALTH AND WELLBEING, MORE THAN HALF REPORT THAT EARLY RETIREMENT HAS DELIVERED A BOOST TO THEIR MENTAL WELLBEING !57% " AN D HALF !50% " SAY THEIR PHYSICAL WELLBEING IMPROVED. #1 $ RETIREMENT 13 So, what is the most popular age to retire early? Sixty is the most popular age to retire early, according to new research[1] which reveals the key steps people have taken to embrace early retirement and examines the costs and bene!its of doing so. WANTING TO ENJOY MORE FREEDOM One in four (25%) are planning to celebrate their 60th birthday by leaving work behind. With the State Pension age currently standing at 66, the !indings show one in six (17%) people who have taken early retirement did so when they were 60, making it the most common age to make an early exit from working life. This is also the most popular target age for people who intend to retire early in the years ahead, with one in four (25%) planning to celebrate their 60th birthday by leaving work behind. The desire to retire early is primarily driven by ‘wanting to enjoy more freedom while still being physically !it and well enough to enjoy it.’ EMBRACING A NEW LIFESTYLE Nearly one in three people (32%) who have retired early or plan to do so gave this reason for embracing a new lifestyle. Financial security is the second most common factor prompting people to embrace retirement. More than one in four (26%) early retirees say their decision was a result of ‘being in a !inancially stable position’ so they can a"ord not to work. The in!luence of money matters is also visible in people’s choice of early retirement age. One in !ive (20%) people targeting early retirement have set their sights on 55 to make the transition from working life. This is likely to be in!luenced by their ability to access their pension savings from this age. ‘TOO TAXING AND STRESSFUL’ Other key factors encouraging people to seek early retirement include reassessing their priorities and what’s important to them in life (23%), wishing to spend more time with family (20%) or !inding they are either ‘tired and bored’ of working (19%) or !ind it ‘too taxing and stressful’ (19%). The research suggests the impacts of early retirement are wide-ranging and broadly positive in many areas of life. Most notably, more than two in three (68%) people who have retired early say their happiness improved as a result. In terms of the world around them, 44% of early retirees say their family relationships improved and 34% reported improvements in their friendships. BOOST TO MENTAL WELLBEING When it comes to their health and wellbeing, more than half report that early retirement has delivered a boost to their mental wellbeing (57%) and half (50%) say their physical wellbeing improved. However, the !indings suggest these bene!its come at a cost, with nearly half of early retirees !inding their !inances worsening as a result (47%). Women are the most likely to have felt a negative !inancial impact from retiring early (50% vs. 44% of men). Across both genders, only 22% feel they have bene!ited !inancially from their decision to retire early. STEPPING STONE TO RETIRING EARLY Among those people who have retired early, one in three (32%) identify having a de!ined bene!it (!inal salary) pension among the main measures that enabled them to take retirement into their own hands. This suggests the concept of early retirement may get harder for younger generations to achieve, with the majority of the private sector workforce now saving into de!ined contribution pension schemes. However, the !indings suggest that people can still take positive steps to make an early retirement possible. Paying o" your mortgage (30%) is identi!ied as the second most common stepping stone to retiring early, while almost three in ten early retirees (29%) say saving little and often was one of their main strategies. Nearly one in !ive (19%) say they also saved extra whenever they received a pay rise or a bonus during their working life. THE MAIN MEASURES ENABLING PEOPLE TO RETIRE EARLY OR THINK ABOUT RETIRING EARLY 32% – Having a de!ined bene!it (!inal salary) pension 30% – Paying o" one’s mortgage 29% – Saving little and often 19% - Saving extra whenever receiving a pay rise or bonus 16% – Receiving a redundancy payout 14% – Receiving an inheritance WANTING A NEW SENSE OF PURPOSE Among those who take early retirement, the research also reveals there is a small contingent who have returned to work (17%) or envisage themselves doing so in the future (15%). Over one in four (27%) cite the reason for returning to work is because they ‘wanted a new sense of purpose’, making this the most frequent driver, followed by ‘missing the company and social interactions with colleagues’ (26%). However, a similar number (24%) of early retirees !ind themselves heading back to work having experienced !inancial issues. While happiness soars in retirement, many people !ind their !inances take the strain when they retire early and money worries are one of the biggest factors resulting in people returning to work. If you aspire to retire early, it’s vital you plan your !inances to be sustainable for the long-term. „ Source data: [1] https://www.aviva.com/newsroom/news- releases/2021/12/sixty-the-most-popular-age-to- retire-early/ A PENSION IS A LONG$TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS PLAN HAS A PROTECTED PENSION AGE). THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP 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 IN THE FUTURE. YOU SHOULD SEEK ADVICE TO UNDERSTAND YOUR OPTIONS AT RETIREMENT. WHAT DO YOU NEED TO DO TO RETIRE EARLY? The dream of an early retirement is very much alive and kicking, but there are many factors to consider along the way and the current uncertainty about the future does not make this an easy decision. For further information or to discuss your requirements, please contact us. 14 RETIREMENT MILLIONS STRUGGLE TO UNDERSTAND THEIR MOST IMPORTANT SOURCE OF INCOME IN RETIREMENT Saving money for retirement is important because you’ll need a nest egg when you’re no longer working. The best way to guarantee an income when you’re in your golden years is to save and invest as much as you can now while you are still working. For the majority of people, pensions represent our biggest single source of private wealth and a record number are saving more money in occupational de!ined contribution pensions. In short, pensions are more important to more of us than ever before. PENSION LANDSCAPE However, despite these record highs, pensions remain a mystery to most. Worryingly, new research reveals a widespread lack of understanding among savers. The annual study of the pension landscape from The Pensions Regulator reports record membership of occupational de!ined contribution pensions, at 23.4 million[1]. This is up from 21.7 million last year. BIGGEST DRIVER This adds to other recent data highlighting the importance of pensions for millions. In early January, data from the O#ice for National Statistics[2] reported that individuals in the UK hold a record £15.2 trillion of private wealth and pensions represent the largest proportion of this !igure at £6.4 trillion. This exceeds £5.5 trillion in property and £3.3 trillion in other assets, including around £2 trillion in cash. The need to close the gap between pension participation and understanding is now critical. Overall, auto-enrolment has been the biggest driver of participation into pension saving over the last decade. When it was introduced in 2012, only four in ten (39%) private sector workers were actively saving for their retirement. This !igure is now more than 70%. CONFLICTING RELATIONSHIP However, it is risky to assume that this participation rate has driven clearer understanding. Despite a signi!icant increase in participation rates, the proportion of adults who agree they ‘understand enough about pensions’[3] has only increased by one percent point in the last ten years (from 43% to 44%). Other research[4] has found a con!licting relationship between value and understanding of various elements of ‘wealth’. Seven out of ten (69%) Britons can con!idently estimate the current value of their cash savings and two in !ive of them (41%) are very con!ident. This ‘con!ident’ !igure rises to three quarters (75%) of those aged 55+. Cash savings represent around 12% of total private wealth in the UK. ‘VERY UNCONFIDENT’ More than half (53%) of those surveyed could also estimate the value of their property quite accurately. This !igure rises to 61% of those who are retired. Property represents around 36% of total private wealth in the UK. However, despite pensions potentially being their biggest combined asset, only 39% of people could con!idently estimate the value of their pension pot. One in ten people surveyed were ‘very uncon!ident’ about estimating the current value of their pension savings. Pensions represent about 42% of total private wealth in the UK. PENSION PARTICIPATION The need to close the gap between pension participation and understanding is now critical. Over the next century it is estimated that the pensioner population in the UK will increase from 12 million to 20 million, meaning that more than one in four people will be pensioners. Automatic enrolment has brought pension savings to millions. And the pension freedoms have given us unprecedented choice in how we can use that money when we reach age 55. But we risk sleepwalking into our retirement if we don’t understand how much we have in our pension pots, what those savings might look like as retirement income and how long we need that money to last. „ Source data: [1] DC trust: scheme return data 2021 to 2022 | The Pensions Regulator (Memberships do not equate with individuals. One individual can have multiple memberships. The "igure of 23.4 million excludes ‘micro’ occupation DC schemes with fewer than 12 members). [2] O#ice for National Statistics [3] Survey by Unbiased and Opinium of 2,000 non-retired UK adults in June–July 2020 [4] Aviva Research was conducted between 5%7 January 2022 by Censuswide. Surveyed 2,000 UK respondents (national representative sample). A PENSION IS A LONG$TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS PLAN HAS A PROTECTED PENSION AGE). THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP 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 IN THE FUTURE. YOU SHOULD SEEK ADVICE TO UNDERSTAND YOUR OPTIONS AT RETIREMENT. THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE. FREEDOM TO ENJOY RETIREMENT WHEN IT COMES If you’re thinking about retirement, we can help make your money work for you. Whatever retirement looks like for you, it’s important to review your situation and make plans now so that you have the freedom to enjoy the time when it comes, however you choose to !ill it. To !ind out more, please contact us. PRIVATE WEALTH RETIREMENT 15 22% RISE IN PEOPLE USING PROPERTY TO SUPPORT THEIR RETIREMENT The signi"icant increase in property prices in recent years has likely shifted many people’s expectations of the role property wealth will eventually play in supporting their retirement. With people spending longer in retirement, one of the challenges that many need to overcome is how to fund it and how to meet the !inancial demands they may face in later life, such as the cost of long-term care. Failure to save enough for old age is forcing more people to use their property to provide income. Research shows so-called ‘Hippies’, or the ‘Home is my Pension’ generation, is increasing at a signi!icant rate. 22% of people are planning ahead for their retirement and expect to use the value of their home[1]. The !indings indicate that a third of all people who aren’t currently retired (35%) own a property but have less than £10,000 saved in their pension pot. HOLDING NO PENSIONS SAVINGS Worryingly, a further 22% of people hold no pensions savings at all. The signi!icant number of small or empty pots, coupled with the 24% increase in median house price values in England and Wales since 2016[2], could be driving more people to consider using their property wealth to fund their retirement. Property is often the largest asset someone has when they reach retirement, especially if they have lived there for quite a while, and will often signi!icantly outweigh any pensions savings they have. ACCESSING PROPERTY WEALTH Based on current house prices in England and Wales, the average homeowner could access over £72,988 in equity release, for instance[3]. People who aren’t currently retired expect to downsize their property (10%), sell their property (9%) or access equity via a lifetime mortgage (6%) to help fund their later life. While many people looking ahead to retirement are hoping to access property wealth, there are a signi!icant number of retired homeowners who could also bene!it from considering the role their property might play in funding their lifestyle. MAIN SOURCE OF INCOME Nearly two-thirds of people over 65 (70%) are dependent on the State Pension as their main source of income and are also homeowners. The !indings show there are a large number of people currently in retirement who may be on a limited income and could bene!it from the likely increases in the value of their home. „ Source data: [1] Opinium survey of 4,000 UK adults between the 31 October and 3 November 2021 [2] O#ice for National Statistics, House price statistics for small areas in England and Wales: year ending March 2021, Nov 2021 [3] Legal & General customers accessed, on average, 24.5% of the value of their home through equity release, putting the expected amount that can be accessed across England and Wales at £72,988: O#ice for National Statistics, House price statistics for small areas in England and Wales: year ending March 2021, Nov 2021 THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR MORTGAGE IS SECURED ON YOUR HOME, WHICH YOU COULD LOSE IF YOU DO NOT KEEP UP YOUR MORTGAGE PAYMENTS. EQUITY RELEASE MAY INVOLVE A HOME REVERSION PLAN OR LIFETIME MORTGAGE WHICH IS SECURED AGAINST YOUR PROPERTY. TO UNDERSTAND THE FEATURES AND RISKS, ASK FOR A PERSONALISED ILLUSTRATION. EQUITY RELEASE REQUIRES PAYING OFF ANY OUTSTANDING MORTGAGE. EQUITY RELEASED, PLUS ACCRUED INTEREST, TO BE REPAID UPON DEATH OR MOVING INTO LONG$TERM CARE. EQUITY RELEASE WILL AFFECT THE AMOUNT OF INHERITANCE YOU CAN LEAVE AND MAY AFFECT YOUR ENTITLEMENT TO MEANS- TESTED BENEFITS NOW OR IN THE FUTURE. CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT. IF YOU ARE IN ANY DOUBT, SEEK PROFESSIONAL FINANCIAL ADVICE. DO YOU NEED HELP PLANNING FOR YOUR RETIREMENT? It’s never too early to start thinking about how you plan to fund retirement, and to seek the appropriate advice to get your a!fairs in order. To !ind out more, please contact us. ‘HOME IS MY PENSION’ GENERATION 16 ESTATE PLANNING WHAT WILL YOUR LEGACY LOOK LIKE? Estate planning is about putting your a$airs in order, to help make the lives of your loved ones easier. It can help to protect your estate for your bene!iciaries and reduce the impact of Inheritance Tax (commonly called IHT for short). IHT is something many of us don’t know enough about. Simply because we don’t think we need to. FIVE KEY POINTS TO CONSIDER # TAX YEAR 2022/23 1) IHT DOESN’T JUST AFFECT THE WEALTHY Traditionally, only the wealthiest in society were a"ected by IHT. But rising property prices means more and more people are now facing it. It all comes down to the value of your overall estate upon your death. If it’s worth more than your personal nil-rate band (NRB), anything above could be liable to IHT at up to 40%. (If you’re single or divorced, the NRB is £325,000 and if you’re married, in a registered civil partnership or widowed, it’s up to £650,000). 2) THERE’S ALSO THE RESIDENCE NIL!RATE BAND (RNRB) # BUT NOT EVERYONE CAN BENEFIT If you’re wondering what the RNRB is, this can be used alongside your usual NRB – and was introduced to help more people reduce their IHT liability. Every UK adult has a RNRB of £175,000. But the rules can be more complex than many people realise. Amongst the restrictions, you can only use this allowance if it relates to a property you have lived in, and passed to a direct descendant (such as your child or grandchild – not a friend, niece or nephew). 3) YOUR ESTATE ISN’T JUST YOUR HOME Your savings and investments, car and any rental properties form a part of your estate. Not forgetting any jewellery you have, household furniture or expensive paintings (minus any liabilities, like an unpaid mortgage). After working out the value of your belongings, you may be surprised by how much your estate comes to. It could be worth a lot more than you think. It’s also important to bear in mind that these assets could increase or decrease in value in the future. 4) ANNUAL REVENUE IS EXPECTED TO KEEP CLIMBING The latest IHT !igures should be a ‘wake-up call’ for families to think carefully about their tax planning. IHT receipts in the United Kingdom amounted to approximately £5.32 billion in the !inancial year 2020/21[1]. 5) YOU COULD DO SOMETHING ABOUT IT There are plenty of perfectly legal steps you can take to protect your family’s wealth from the taxman. The IHT solutions include annual exemptions, allowances, direct gifts and trusts. Of course, there are many di"erent options to choose from – so it’s important you !ind one that’s right for you. With this in mind, and the fact that IHT can be a complex subject, you should always obtain professional !inancial advice to guide you through the complexities – and help you put suitable plans in place. „ Source data: [1] https://www.statista.com/statistics/284325/ united-kingdom-hmrc-tax-receipts-inheritance-tax/ INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE. WORRIED ABOUT INHERITANCE TAX EATING INTO YOUR ESTATE? How can you leave a tax-e!!icient legacy? We’ll help you leave more to those you love most. Although it’s not nice to think about, getting your a!fairs in order for when you pass away can bring real peace of mind as you get older. To !ind out more, please contact us to discuss your requirements. PROTECTING FAMILY WEALTH FINANCIAL PLANNING 17 COUPLES REVEAL THEY’RE POLES APART Most couples hate talking about money and "ind it a hard subject to discuss. However, while it may not seem like the most romantic topic, if you don’t talk about what you each want from your !inances and how to manage your money, it’s likely to result in more friction and arguments. Talking about !inances with your loved ones often leads to heated words. In fact, according to research[1] money is the most common cause of arguments between couples, with 62% of those who argue with their partner disagreeing over money. Couples !ind it easier talking about childcare, sex or even household chores than money. MOST FRICTION Couples quarrel about most aspects of their !inances, from how much they earn to their levels of debt, but it’s what their other half spends that causes the most friction. There are also fundamental di"erences when it comes to expectations of each other and how they view their partner’s behaviour. A third (33%) of couples confess not seeing eye to eye, admitting that when it comes to spending and saving, they’re simply incompatible. Attitudes towards money also stir up strong emotions, with couples taking a dim view of their other half. One in four (24%) couples consider their partner irresponsible with money. A !ifth (20%) of people who don’t think their partner is responsible with money keep a secret savings pot. SOME COMPROMISE And when it comes to managing money jointly, three quarters of couples (76%) decide to keep some or all their banking separate from their partner. Around a third (35%) keep all their money in separate accounts, while just 24% of couples hold everything in a joint account. Because we don’t tend to talk about money, one partner can assume that their way of managing their money is the ‘right’ way, and not understand why the other doesn’t take the same view. So, the key to a more harmonious relationship is to talk about your !inances and agree a way that works for both of you, even if it involves some compromise. BETTER CONTROL It’s also important not to let !inancial concerns simmer beneath the surface. Being more open with one another about money and !inancial goals will also help couples to build a !inancially secure future. Facing uncomfortable conversations can help ensure a better relationship with money and each other. Set time aside to talk about your !inances properly, as it may help both of you gain better control of your spending. It may feel a bit odd at !irst, but it should reduce stress and friction in the long term. Set some short-term goals (money in a savings account so you can pay for any emergencies), but don’t ignore long-term goals as well (paying o" your mortgage, when you want to retire, etc). HOUSEHOLD BILLS Agree how you will split household bills. This is particularly important if one of you earns more than the other. Some people automatically assume it will be 50:50, no matter how big the pay gap, so it’s worth clarifying before the bills mount up. Be open about any debts you have, especially if you have a joint bank account or joint loans. As soon as you take out a joint loan, mortgage or current account with an overdraft facility, your credit rating will a"ect your partner’s and vice versa – even if you’re applying for credit in one name only. MANAGE MONEY So, if you’re hiding debt from your partner, not only could it a"ect your relationship, but it could also a"ect your ability to get a mortgage, car !inance or even a pay-monthly phone contract. It may be a hard conversation to start, but tackling these issues together might also take a weight o" your mind. Decide how you’d like to manage your money. In relationships, tasks can sometimes be divided without couples realising. You don’t necessarily have to make every single decision together – although you can if that suits you – but make sure you’re both involved. MORE TRANSPARENCY Decide whether you want to keep your money separate or pool it in joint accounts. There are pros and cons to each approach. If you have a joint account there’s more transparency about your !inances, but the bank can pursue either of you for the full amount of any debt or overdraft, regardless of who ran up the debt or used the overdraft. Keep talking. Your circumstances may change or you may feel like you want di"erent things from your !inances – and your life. So, keep talking about money and try to address any issues early on, before they become big problems. „ Source data: [1] Royal London commissioned a survey by Opinium between 21%25 January 2022 with a sample of 2,000 nationally representative UK adults (1,351 in a relationship). TIME TO DO MORE WITH YOUR MONEY? If you’d like to learn more about how we could help you plan your !inances for the future or for more information, please contact us. LOVE AND MONEY 18 INVE STMENT 4 STEPS FOR FUTURE WEALTH CREATION IN YOUR MID$20S TO MID$30S Investing can be challenging for anyone, but for those in their mid-20s to mid-30s, it can be especially daunting to build a portfolio – especially while paying o" student loans, credit card debt and establishing some savings. BUILDING AN INVESTMENT PORTFOLIO INVESTMENT 19 The reality is that people should start saving and investing as early as possible. The growth of savings and the power of compounding gives an enormous head start to those who can put money aside and invest in the early stages of their lives and careers – and building an investment portfolio is one proven way to grow money and wealth. A FEW BASIC PRINCIPLES One thing to consider before launching into the following steps is whether you have accessible emergency savings for a rainy day – such as three to six months’ worth of living expenses. If you do, then now you can start to consider how to build your future wealth. There are many di"erent ways to build an investment portfolio. However, there are a few basic principles that you should keep in mind, no matter what approach you take. STEP 1 First, every investor needs to ask themselves the same basic questions before getting started. You need to have a clear understanding of your investment goals. What are you trying to achieve? Are you looking for growth or income? How much risk are you willing to take on? You might be investing to have enough money for retirement, which could be decades away. But equally you could have shorter-term goals, too, like starting a family or buying a larger home. With a clear goal in mind, you can create a realistic plan for achieving your objectives within a certain time frame. Choosing the right investing strategy matters when shaping your !inancial plan and a goals-based approach o!fers a new take on growing wealth. Goals- based investing focuses on reaching life’s goals versus trying to get high returns on your investment portfolio. STEP 2 Once you know your goals, you can start to identify the right assets to help you reach them. Asset allocation is all about deciding how much of your money you choose to put into di!ferent types of investments. The main types of assets people rely on for investing are shares, bonds, cash and commercial property. How you allocate across these di!ferent assets will be largely down to not only what you want to achieve, but also how long your investment time horizon is. If you’re comfortable with more risk and you want a greater chance of stronger growth, you might allocate more money into shares. But if you are looking for more consistent returns, then government and corporate bonds could be the way to go. STEP 3 You also need to think about how you are going to diversify your portfolio. One of the golden rules of investing is to spread your money across a range of di!ferent asset classes. This will help to reduce risk and ensure that you are not too heavily exposed to any one particular area. This approach means that if one or more of your investments rise you will bene!it but, if they fall, there should be a degree of protection because, hopefully, some of your other holdings in di!ferent asset classes will be going up in value. So the most obvious reason to spread your investments around is that it reduces volatility and lessens the impact of any one share or asset class performing badly. STEP 4 Finally, you need to review your portfolio regularly. It allows you to stay up-to-date on the performance of your investments. This is important information to have so that you can make informed decisions about whether or not to continue investing in certain assets. Additionally, reviewing your portfolio helps you to identify any changes that you may need to make in order to reach your !inancial goals. Things change. Life happens. A divorce, an inheritance, helping out loved ones or a change in income could all have a signi!icant impact on your !inancial situation. Ultimately, reviewing your investment portfolio on a regular basis is crucial to helping you to make sound investment decisions and stay on track to reach your !inancial goals. „ INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE. THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE. WHICH WEALTH CREATION STRATEGY IS RIGHT FOR YOU? So you want to start investing, building future wealth and creating your portfolio. To discuss how we can help and the options available to you, please contact us for more information. 20 FINANCIAL PLANNING NINE IN TEN ADULTS MAKE STARK SPENDING DECISIONS AS ANXIETY RUNS HIGH The pressure of spiralling living costs is a major concern among many UK households, with the vast majority looking to make signi!icant lifestyle changes in response to price rises. According to new research [1], 95% of adults in the UK say they are worried about the anticipated rise in the cost of living in 2022. Women are the most worried, with a third (33%) mentioning they are extremely worried compared to a !ifth (22%) of men. COST OF LIVING INCREASES The expense most UK households are concerned about is the rise in energy bills (92%), with three in ten (29%) being extremely worried about this, followed by food shopping (87%). Cost hikes to phone and internet contracts, which typically increase by the more than the Consumer Price Index (CPI) rate, concerns 84% of UK adults. The level and speed of price rises means nine out of ten of us (89%) are looking to make changes to pay for the cost of living increases. Worryingly, the option for a !ifth (21%) of people is to borrow their way out of trouble, with 7% admitting they simply don’t know how they’ll cover increases and 5% of workers saying they are considering taking out a short-term (payday) loan. CUT BACK ON COSTS Two-thirds (66%) of people say they will change their food shopping habits, with half of these saying they’ll reduce the amount of food they buy. Other solutions to cut back on costs include reaching for the thermostat and reducing the length of time the central heating is on (46%), turning o" the heating in unoccupied rooms (36%) and nearly a !ifth (17%) taking the drastic action of turning the heating o" altogether. As part of the cutting-back regime, half (48%) of fulltime workers feel they’ll be forced to reduce or stop saving altogether. On top of rising costs, National Insurance contribution rates increased from April, just as energy bills rise more steeply, which will dramatically a"ect take-home pay. For an individual on a salary of £50,000, that will mean an extra deduction of £464 a year, or £214 for someone earning £30,000. Worryingly, a !ifth of workers (20%) say they are not aware of these changes, and two-!ifths (43%) say whilst they are aware, they are not prepared for the changes to start. ANXIOUS ABOUT FINANCES Just as families in the UK felt they’d seen the worst of the !inancial impact of COVID, they’re facing a dramatic rise in their household bills. People are having to make di!!icult choices in an attempt to reduce the impact of rising energy bills, higher in!lation, tax hikes and potential interest rate increases. Understandably, this has made many people anxious about their !inances, but it’s also testing their !inancial resilience. Household bills are rising steeply, with the cost of !illing up the car at the pumps having reached eye-watering levels, leaving families up and down the country worried about their ability to make ends meet. Concern is so widespread that families who, on the face of it, would be considered !inancially comfortable and even those with six-!igure incomes are deeply worried. 10 WAYS TO HELP MANAGE YOUR FINANCES 1. SAVE MONEY ON YOUR ENERGY BILLS If you’re !inding it hard to pay your energy bills, contact your provider as they should help you with ways to pay and don’t be afraid to ask for help from a debt advice charity if you’re struggling. Switching your energy supplier used to be a good way of saving money on your household bills, but with energy prices soaring, you’re probably better o" staying on the standard tari" with your existing supplier once your !ixed tari" comes to an end. Some suppliers aren’t taking on new customers, and that way you’re protected by the energy price cap. The government-backed website – Simple Energy Advice – has tips on how to keep your energy bills down. 2. SAVE MONEY ON PETROL Try using a fuel price checker site to check that you’re always getting your fuel for the cheapest price possible. Other ways to save include: driving at a lower speed and avoiding accelerating and braking quickly if you can; making sure your tyres are at the right pressure; and taking out anything heavy in the car that you don’t need to carry. 3. FOOD BILLS Grocery bills can make up a big proportion of your household spending so it makes sense to look for savings. Plan your meals for a week and then write your shopping list – this will help you avoid buying unnecessary items. Consider changing to a cheaper supermarket or to di"erent brands if you prefer a particular supermarket. 4. WATER BILLS You can’t switch water suppliers but there are steps you can take to keep your bills down. Check if you’d save money by switching to a water meter. You can use the Consumer Council for Water’s calculator. If you’re on certain bene!its HOW TO COPE WITH THE RISING COST OF LIVING FINANCIAL PLANNING 21 and have a large family or someone with a particular medical condition, you may qualify for the WaterSure scheme, which caps water bills. Meanwhile, if you’re on a low income or receiving bene!its, check what additional assistance your water company o"ers. 5. COUNCIL TAX Depending on your circumstances and who is living with you, you may qualify for a Council Tax discount. For example, you can get a 25% discount if you’re the only adult living in the property. Find out what discounts are o"ered by your local council at GOV.UK. If you’re on a low income or certain bene!its you may be able to get a Council Tax Reduction. Your bill could be reduced by up to 100%. There’s a di"erent scheme in Northern Ireland. 6. CHECK IF YOU’RE ENTITLED TO STATE BENEFITS Billions of pounds of state bene!its go unclaimed each year, and you could be missing out. The national charity Turn2us has a free and con!idential bene!its calculator on its website (https://bene!its- calculator.turn2us.org.uk/), which can help you work out which means-tested bene!its you’re entitled to. It also has a grant search tool (https://grants-search. turn2us.org.uk/) for information on grants you may be able to apply for. 7. FIND OUT WHERE YOUR MONEY’S GOING Start by !inding out where your money’s being spent. It sounds obvious, but we may not realise exactly how much we’re spending each month – and what we’re spending it on – until it’s laid out in front of us. Review your last three bank statements and credit card bills (or check online) and spend some time going through them, highlighting any areas where you think you’re spending money unnecessarily or spending too much. This could be on anything from a top of the range broadband package that you don’t need, to a mobile phone contract where you’re paying for data you don’t use. Every month money is wasted on unused subscriptions, with the most common wasted money on gym memberships. A !ifth (19%) of UK adults said they planned on cancelling TV subscriptions (e.g. Net!lix, Amazon Prime). Even magazine subscriptions of a few pounds a month are money down the drain if you don’t have time to read the magazine. Take a few minutes and cancel any subscriptions you don’t really use to save yourself a bit of cash. 8. DRAW UP A BUDGET Drawing up a weekly or monthly budget will help you get your !inances under control. It’s just a list of money you have coming in and what you spend and it doesn’t have to take long to set up. There are plenty of templates online to get you started. Alternatively, budgeting apps can also be used to plan what you want to spend and keep track of it. 9. SEE IF YOU CAN PAY LESS INTEREST If you owe money on an expensive credit card, it may be worth considering whether you can transfer the balance to a credit card charging 0% interest. Although these cards are interest free, you will normally be charged a balance transfer fee of between 1 and 3% of the amount you transfer. Because you won’t be charged interest on your balance, more of your money can go to repay what you owe. These cards aren’t right for everyone, and it’s important to make sure you can pay o" your balance by the time the 0% interest deal runs out. It may also a"ect your credit score, especially if you do it multiple times. 10. GET HELP WITH UNMANAGEABLE DEBTS If you are struggling to pay for the essentials, you are using one credit card to pay o" another or your debts are causing you worry, then contact a debt advice charity, such as StepChange. They will be able to give you help with your debts, free of charge. „ Source data: [1] Royal London commissioned a survey by Opinium between 25 February and 1 March 2022 with a sample of 4,001 nationally representative UK adults. NEED HELP TO MAKE THE MOST OF YOUR MONEY? Rising in!lation and increases in taxes are set to leave millions worse o!f in 2022. We’re here to help you review your current !inancial situation and answer any questions you may be concerned about. 22 ESTATE PLANNING 20% OF 18$24$YEAR$OLDS EMERGE AS WILL MAKERS As many as a "ifth (20%) of young Gen Z adults aged 18 to 24 say they have already made a Will[1]. Getting their a"airs in order at such an early age compares favourably relative to the UK adult population overall, where just four in ten (40%) people have made a Will. It would appear that Gen Z is also ahead of the game as just 21% of their Generation Y contemporaries (those aged between 25 and 40), and 32% of Generation X (those aged between 41 and 56) have made a Will. SILENT GENERATION Unsurprisingly, it’s the older generations that lead the way as these age groups are likely to have gone through life changes warranting estate planning, such as starting a family, buying property, caring for older family or planning their own retirement. Among the Silent generation (75+ years old), 82% have a will, as do 65% of UK Baby Boomers (57 to 75 years old). While it may be an uncomfortable subject to think about, creating a Will is an important part of !inancial wellbeing and planning for the future. It can provide peace of mind that loved ones are supported after you die, and also helps ensure your assets are dealt with in the way that you want. It’s promising that so many young people have already put a Will in place and are mindful of the long !inancial journey they have ahead. CIRCUMSTANCES CHANGE Irrespective of your life stage, making a Will at any age is important to help improve your !inancial wellbeing. As you move through life, circumstances change, as do the potential risks and complications when you pass away, so it’s wise to update or create a new Will after big life moments such as getting married, starting a family or buying a new property. And, if you are saving into a pension remember to update your bene!iciary nomination too, as they’re not covered by the rules governing Wills. The research also found that men and higher earners are more likely to have their a!fairs in order. More than two-!ifths (44%) have a Will, compared to 37% of females. 61% of those earning £70k+ per year and half (54%) of those earning between £40k and £70k have a Will, compared to just 35% of those earning less than £20k, and 41% of those earning between £20k and £40k. FINANCIAL PRESSURES Surprisingly, also highlighted in the research was the fact that that the pandemic has not necessarily driven people to create a Will, with just 4% of those whose !inancial plans or approach to savings have been impacted by COVID making a Will. Two-thirds (65%) of Gen Z adults want to be able to leave an inheritance, although many are conscious of the !inancial pressures they may face later in life that could hinder their ability to pass on assets. A quarter (25%) already expect to be paying for long-term care for a loved one in retirement, and 25% also expect to help their parents/in-laws !inancially. „ Source data: [1] Boxclever conducted research among 4,896 UK adults. The research is nationally representative of UK adult population in terms of age, gender, region, with 578 people falling into Generation Z. Quantitative "ieldwork was conducted between 16– 23 July 2021. Qualitative "ieldwork was conducted between 3%11 August 2021. IT’S GOOD TO TALK When it comes to your future, putting in place the right plan is essential for your future wellbeing. To discuss how we could help you, please contact us for more information. WHERE THERE’S A WILL THERE’S A GEN ZER PROTECTION 23 MORE THAN HALF OF UK ADULTS HAVEN’T DISCUSSED THE SUBJECT With wealth for millennials set to double in the next 20 years, it’s time to get over the awkwardness and have the conversation now. One of the main reasons why people don’t discuss their inheritance wishes is that they assume estate planning is not for them. That it is only necessary if you are very wealthy. MOST OF US WOULD LIKE TO LEAVE A LEGACY But nothing could be further from the truth. Most of us would like to leave a legacy and if you want to ensure your wishes are followed, obtaining professional advice and planning is essential, whatever your circumstances. New research[1] has highlighted 58% of UK adults admit they have never discussed inheritance matters with their loved ones – with the reluctance to do so equally split between men and women. The !indings revealed that the main reason people shy away from it is because they don’t believe they have enough assets to consider it worthwhile (18%). GETTING OLDER IS THE MAIN PROMPT FOR THINKING ABOUT SUCH MATTERS However, for nearly half the population (49%), getting older is the main prompt for thinking about such matters. Other life events that have pushed people to confront it are: the birth of a child or the death of a parent (both 7%), followed by the COVID$19 pandemic or a health scare (both 4%). And there are certain people who hold the key to unlocking these conversations, with 54% saying their partner is the preferred person to talk to, followed by 22% who feel most comfortable chatting things through with their children. Worryingly, only 2% say they have discussed it with a solicitor and only 1% have done so with a professional !inancial adviser. READY TO START A CONVERSATION ABOUT INHERITANCE? THE IMPORTANCE OF AN UP!TO!DATE WILL Making a Will provides a good reason to have a multi-generational family meeting about your inheritance wishes. Having an up-to-date Will is important for both you and your family. The truth is that having an out-of-date Will is as problematic as having no Will at all. Once you have an up-to-date Will, talking it through with your professional !inancial adviser, they can then recommend a plan about how to approach your inheritance goals. Also remember, failing to prepare your children for what they may inherit can hinder their ability to handle money wisely. TAKE ADVANTAGE OF THE GIFT ALLOWANCE You can give away £3,000 each year and this will not be subject to Inheritance Tax (commonly called IHT for short). In addition, parents can gift £5,000 to each child as a wedding gift, while grandparents can give £2,500. Gifting money regularly throughout the year can be a great way to !inancially help loved ones and can also reduce your IHT liability. Some people will !ind it hard asking for money, so try and speak to your children and grandchildren to !ind out if you can help them with something speci!ic, such as a new car or school fees. LET LIFE EVENTS HELP YOU START A CONVERSATION Life events, like a birth, adoption, marriage or a family bereavement can make people evaluate their own plans. Use these opportunities as a way of talking to relatives about how you would like to pass on your wealth. TALK ABOUT LATER LIFE CARE Many people are worried about how they will pay for social care when they get older. As a result, people may be starting to plan for this earlier than previous generations. It’s important to talk to your family about the care you want so they stay true to your wishes. This could be an ideal time to introduce the subject of inheritance, as estate planning and later life care go hand in hand. TALK ABOUT FAMILY HEIRLOOMS If you !ind it hard to approach the subject of estate planning with your family then a good place to start could be talking about family heirlooms. People enjoy hearing stories about older relatives, even if they never had the chance to meet them. Talking about items that are important to you or were important to other family members can be a great way to start a conversation about estate planning. „ Source data: [1] The research of 3,000 nationally representative UK adults was commissioned by Find Out Now in November 2021 on behalf of Brewin Dolphin. INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE. LET’S TALK ABOUT INHERITANCE MATTERS! Some people !ind the idea of discussing inheritance uncomfortable and wrongly assume that planning in advance is complicated, but if you don’t discuss things before it’s too late the situation can become much more thorny in the future, particularly if there is a blended family or if there is anything unexpected in the Will. For more information about how we can help you, please contact us. DISCUSSING INHERITANCE WITH YOUR HEIRS RETIREMENT NEST EGG NEARLY A HALF OF OVER$50S REGRET NOT SAVING INTO THEIR PENSION EARLIER The days of working for a single employer for your entire career and retiring with a comfortable pension are largely gone. The responsibility for accumulating a retirement nest egg now rests with individuals as opposed to their employers. Saving enough for retirement is challenging for many people, but an era of changing demographic trends, such as increased longevity and delayed marriage, can make this journey even more di#icult. NOT FINANCIALLY STABLE ENOUGH TO CONTRIBUTE New research[1] into the attitudes of the over-50s towards their pension has uncovered that nearly a half (49%) regret not saving into their pension earlier, and almost two-thirds (64%) wish they had contributed more into their retirement savings at an earlier stage. Just over a quarter (26%) stated that they only started paying into their pension after they turned 30 years old, primarily because they did not feel !inancially stable enough to contribute any sooner (51%). Many, understandably, prioritised raising children (42%) and paying o" their mortgages (40%) before putting any surplus cash into their pension. However, a third put leisure/holidays (32%), clothing (21%) and their pets (10%) before their retirement income. ‘MODERATE’ STANDARD OF LIVING IN RETIREMENT Almost four in ten (39%) people over the age of 50 believe that an income of between £10,000 and £20,000 per annum in retirement will be enough to live ‘comfortably’. This is despite !igures announced stating that £20,800 per annum will only provide an individual with a ‘moderate’ standard of living in retirement. To enjoy a ‘comfortable’ standard of living, the amount would need to increase to £33,600 per year. Just under a quarter (24%) of those aged over 50 believe that a personal contribution of between 0% to 5% of their salary is an ‘appropriate and achievable’ level to attain a savings pot big enough to support them in retirement. TAKING PROFESSIONAL FINANCIAL ADVICE IS KEY When asked about !inancial advice, worryingly more than 70% of over-50s say they have never sought professional !inancial advice regarding their pension. Almost a third (30%) say they feel they know what they are doing and don’t need !inancial support, whilst 10% say they rely on their family and friends for support and advice. However, after hearing that they could add as much as £47,000 to their pension[2] (over a decade) by taking professional !inancial advice, half of them say they would. Pensions are more important to more of us than ever before. Automatic enrolment has brought pension savings to millions, but this was only introduced in 2012 and for many, especially those over the age of 50, it is perhaps too little, too late. TAKE STOCK OF YOUR FINANCIAL SITUATION EARLY Hindsight is a wonderful thing and life in your 20s and 30s can often take over, with children to raise, debts to pay and holidays to be had. However, it’s important to take stock of your !inancial situation early. You may think you have enough spare cash, or that you have years until you retire, but most people over the age of !ifty (64%) wished that they had paid more into their pension pot, earlier. It’s also important that people are realistic about how much they might need to live on in retirement. With more people continuing to pay rent or mortgages after they !inish working[3], it is unlikely that an income of between £10,000 and £20,000 per year will be su#icient to have a ‘comfortable’ lifestyle. „ Source data: 1,034 UK adults over the age of 50 (retired and non- retired) interviewed between 31.01.2022%07.02.2022 [1] https://www.retirementlivingstandards.org.uk/ news/retirement-living-standards-updated-to-re"lect [2] https://ilcuk.org.uk/"inancial-advice-provides- 47k-wealth-uplift-in-decade/ [3] https://www.bbc.co.uk/news/business-42193251 A PENSION IS A LONG$TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS PLAN HAS A PROTECTED PENSION AGE). THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP 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 IN THE FUTURE. YOU SHOULD SEEK ADVICE TO UNDERSTAND YOUR OPTIONS AT RETIREMENT. PLANNING FOR A FULL AND HAPPY RETIREMENT? To avoid sleepwalking into retirement it’s important to understand how much you have in your pension, what that money might look like as retirement income and how long you might need that money to last. For advice on all your options to make your money last a lifetime, please contact us. Published by Goldmine Media Limited Basepoint Innovation Centre, 110 Butter!ield, Great Marlings, Luton, Bedfordshire LU2 8DL Articles are copyright protected by Goldmine Media Limited 2022. Unauthorised duplication or distribution is strictly forbidden. 12 RETIREMENT