How Planning for Retirement Can Boost Your Health and Wellbeing

Retirement is one of those major life events that can throw up all sorts of emotions, from excitement to blind panic. But your reaction to this looming milestone can depend largely on how you deal with it in advance.

If you’re prepared for retirement and have taken the right advice, you can look forward to your post-working life with confidence rather than anxiety, which benefits both your physical and mental health as the years pass. And this doesn’t have to be complicated…

Financial Advice Can Make a Huge Difference
You shouldn’t need to be a financial expert with a detailed understanding of every product, rule and regulation to make good decisions. But the complexity of the marketplace does make the very idea of financial planning extremely daunting and overwhelming.

That, in turn, can lead to people putting off getting their finances in order and kicking the can down the road.

But ultimately, that doesn’t cure the underlying anxiety people will have about funding their retirement. That’s why it’s so beneficial to speak to a qualified specialist financial planner as soon as you can.

An expert in pension and retirement planning can work with you to identify what you want from life, and from your retirement in particular, and offer advice tailored to your specific needs.

If you know an expert is acting in your best interests and considering your unique wishes and circumstances, you can live your life with confidence, safe in the knowledge that you’re taking the right steps to enjoy a fulfilling retirement.

Get into Good Financial Habits
This is something that any financial planner will tell you early on, as getting to grips with how much you’re earning, spending and saving will put you in a better position to achieve your goals, both in the long and short term.

When it comes to funding your retirement, paying a regular amount into a pension scheme as early as possible will pay off further down the line, particularly as it’s a tax-efficient way to save for the future.

Our finances are coming under unprecedented pressure right now, with rising inflation, energy prices and tax hikes coming together to create a cost of living crisis for many.

But knowing that you’re taking care of your future will help to give you vital peace of mind during these tough times.

Pension Planning Doesn’t Have to Be All-Consuming
As we said earlier, getting your finances in order can seem overwhelming, and even with the best will in the world, you might prefer simply putting it off rather than spending your precious free time going through complex documents.

But it’s actually less of a chore and a drain on your time if you deal with it early, and made much easier if you have a financial planner taking care of all the complicated aspects.

So once you’ve got your plans for retirement in place, you can spend the coming years and decades concentrating on those things that actually make you happy.

The short message to take away from this is that putting off retirement planning isn’t good for you, and planning for the future doesn’t have to be complicated if you work with a financial planner.


Do I Really Need to Make a Will?

What happens to your assets when you die? Doesn’t everything automatically go to your partner or spouse?

Well, no, and this mistaken belief might explain why so many people in the UK haven’t taken out a legally binding Will.

According to a survey by Will Aid, 49 per cent of people in the UK don’t currently have a Will in place, while 14 per cent of those who haven’t made a Will think their loved ones will automatically inherit when they die.

But that’s not what the law says, so if you die without a Will, your wealth won’t be distributed according to how you wish, even if you’ve made it known what you want to happen upon your death.

What Happens if I Don’t Have a Will?

The Rules of Intestacy govern what happens to a person’s Estate if you die without leaving a valid Will.

These state that once any tax and debts have been paid, the first £250,000 of what remains, your personal possessions and half of any outstanding wealth will go to your spouse or civil partner, and the rest will go to your children once they’ve turned 18.

So what does this mean in reality?

Firstly, it means that if you’re not married to your partner, they could receive absolutely nothing, even if you’ve lived together for many years.

Secondly, it means that if you’re separated but not divorced, your ex-husband or ex-wife will have a legal claim to part of your Estate.

Next, the rules mean that if your entire Estate is worth less than £250,000, the surviving spouse or civil partner will inherit everything, so conceivably, your children might not receive a penny.

And if you don’t have any living family members, all your assets will go to the state, whereas with a Will, you could have left it to an organisation or charity that you support.

So it’s in the best interests of both you and your loved ones to draw up a legally binding Will, so you can be sure your assets will go to your chosen beneficiaries and that nobody is left out.

A Will also lets you give clear instructions on other matters, such as whether you want to be cremated or buried, and who you want to be in charge of organising your Estate.

Take Charge of What Happens to Your Estate

Once you’ve taken out a Will, it’s then crucially important that you keep it up to date. Otherwise, it might not reflect changes in your life that may have happened since the original document was written, such as a marital separation, the death of a named beneficiary or the birth of a new child or grandchild.

Taking out a Will can also make a big difference to those loved ones you’ve left behind. For instance, if you’ve clearly laid out your wishes and these are legally binding, there’s no room for dispute over who gets what and what should happen to your money.

A Will also allows you to make sure you’re not paying more Inheritance Tax than is necessary, which again could be a great relief to your family and save them unnecessary stress at what’s already going to be a difficult time for them.

Ultimately, the advantages of taking out a Will are many, and it lets you be in control of your money and where it goes – and that can provide invaluable peace of mind to all concerned.


Do You Want a Shorter Working Week?

Today, there’s no single definition of a typical working day. Many will go to the office for eight hours, work irregular shifts or set up a laptop in their front room, spare bedroom or favourite coffee shop.

That has massively fuelled the debate about moving away from a traditional five-day working week, with many arguing that switching to a four-day week could improve people’s productivity and work-life balance.

A six-month trial of a four-day working week began in Scotland last month, which sees participating organisations across different sectors doing four days a week with no loss of pay, while committing to maintaining their productivity.

This real-world trial, organised by 4 Day Week Global, is running alongside similar schemes in other countries, including the US, Australia and the Republic of Ireland.

This means that in only a few months, we’ll have far more empirical evidence about the costs and benefits of switching to a four-day week, rather than promises, theories and speculations. And that could significantly fuel calls to more heavily embrace this way of working in the future.

The idea of a four-day working week certainly seems popular in Scotland, with research by IPPR Scotland showing that more than eight in ten working-age Scots would back adopting this approach with no loss of pay.

Some 80 per cent of those polled said they believe a four-day working week would improve their wellbeing, while 65 per cent think it would have a positive impact on Scotland’s productivity.

The debate about a four-day working week is raging in Wales as well. Wales’ Future Generations Commissioner and the thinktank Autonomy have prepared a report outlining how this approach could benefit the Welsh public sector, and it’s produced some interesting findings.

For example, estimates suggest a four-day week with no loss of pay would create 37,859 public sector jobs in Wales, including nearly 27,000 full-time positions.

Figures also showed that 62% of the Welsh public would choose to work a four-day week or less if they were given the option.

Will Stronge, co-director of Autonomy, said all the evidence suggests this approach would be a “win-win” for both workers and employers in Wales.

“Moving to a four-day week would boost productivity and workers’ wellbeing and create tens of thousands of new jobs in the Welsh public sector,” he commented. “The potential benefits are too large to ignore.”

Sophie Howe, Wales’ Future Generations Commissioner, has urged the Welsh government to pilot a four-day working week, as she believes this will lead to increased productivity and a happier, healthier workforce.

“The working week has not changed for more than 100 years, and now seems the perfect opportunity for the Welsh government to commit to a pioneering trial and build evidence for greater change across Wales,” she said.

While polls show that the Welsh and Scottish public are largely in favour of the idea of a four-day week, trials around the world will help to solidify the business case for making this change.

Higher productivity and reduced absenteeism are two obvious benefits, so it will be fascinating to see from the trials what effect a four-day week has had on the balance sheets of participating firms.


Could Ukraine Crisis Force National Insurance U-Turn?

“Events, dear boy, events.” This famous quote is often attributed to former prime minister Harold Macmillan after being asked what could knock his government off course.

This could be a timely quote right now, as the horrific events in Ukraine look set to impact on consumers and businesses across the world.

The UK government will have hoped that the recent dropping of coronavirus restrictions would have kickstarted a period of strong consumer confidence and economic growth.

But rising food and energy prices have made its efforts to pay back the bill it racked up throughout the pandemic, such as a planned increase in National Insurance, hugely controversial.

Despite vocal objections, Prime Minister Boris Johnson and Chancellor of the Exchequer Rishi Sunak recently joined forces and insisted the National Insurance hike would go ahead.

However, Russia’s invasion of Ukraine is pushing up global energy prices even further, and the use of sanctions by the West means there are questions over the stability of Russian gas supplies in Europe.

That’s led to fears from some analysts that inflation could exceed eight per cent in the next couple of months, which could be devastating for both businesses and households who are already struggling in the face of ever-increasing costs.

As a result, Rishi Sunak is facing renewed calls to scrap his planned National Insurance increase.

Manufacturing trade body Make UK, for example, has urged the chancellor to postpone the tax increase until the UK is on a stronger economic footing, after a survey found that nearly three-quarters of manufacturing businesses would pass on, or be likely to pass on, the increase in their costs following the tax hike to their customers.

Meanwhile, the study showed that three-fifths of those polled believe the National Insurance increase could affect their hiring intentions.

Stephen Phipson, chief executive of Make UK, said: “The proposed increase remains illogical and will be even more ill-timed given how circumstances have rapidly changed since it was announced.

“The cost burden on business is continuing to escalate and, while some of these increases are due to global events, government must avoid shooting business in the foot by an entirely self-imposed decision.”

The government has already acknowledged that the consequences of the Ukraine invasion will lead to higher prices for consumers and businesses in the UK.

Foreign secretary Liz Truss, for example, told Sky News: “There will be an economic cost here in Britain. There will be a cost in terms of access to oil and gas markets.”

However, ministers have not been forthcoming about whether ongoing events in Ukraine will knock its domestic policy off course.

One thing that is clear though is that the voices that called for the National Insurance hike to be delayed or scrapped are likely to get much louder over the coming days and weeks, particularly as Rishi Sunak is gearing up to deliver his Spring Budget later this month.

Mr Sunak’s political opponents might also remind him that the Conservative Party had pledged not to increase National Insurance in its 2019 election manifesto.

The government’s argument has been that the coronavirus pandemic and the costs that came with it couldn’t have been foreseen at the time of the last election.

But many will argue that the same could be said about the Russian invasion of Ukraine, and that ministers need to be flexible in the face of an extreme situation, especially when so many homes and livelihoods are at stake.

Will Mr Sunak back down in the face of strong opposition or stick to the path he’s already laid out? We will have to wait and see.

Lasting Power Of Attorney: Why It’s An Issue You Can’t Ignore

Ageing and death aren’t easy subjects to think about, but as we get older, they’re topics that it would be foolish to ignore.

The average life expectancy in the UK is continuing to increase, which means many more of us might struggle to manage our own affairs and remain independent in the future.

That in turn means steps must be taken to make sure the right decisions are made on our behalf in later life.

While you may be of sound mind right now, this might not be the case in the future, and you might need to have a difficult conversation sooner rather than later about arranging a Lasting Power of Attorney (LPA).

An LPA means a trusted person has the legal right to make important decisions on your behalf if you become unable to do so yourself.

There are two types of LPA in the UK.

Property and Finance

This includes paying bills, selling a property and managing a bank account.

Health and Welfare

This concerns issues such as medical care, making decisions on life-sustaining treatment and taking care of a person’s daily routine, such as washing and dressing.

Most Britons Haven’t Planned Ahead

Worryingly, many of us haven’t made any preparations for the future. In fact, figures from the Office of the Public Guardian (OPG) show that less than 1% of adults in the UK have an LPA.

OPG data also revealed that nearly half of over-45s didn’t actually know anything about LPAs, and when given more information, nearly two-thirds weren’t interested in setting one up in the future.

That’s particularly interesting in light of a separate study by Solicitors for the Elderly (SFE) and think tank the Centre for Future Studies, which revealed 70% of the British public want a family member to make crucial healthcare and welfare decisions for them.

Yet nearly eight in ten have failed to even discuss their care or end-of-life medical wishes with family members, while almost two-thirds mistakenly believe their next of kin will automatically get the right to make decisions on their behalf.

Only an LPA can ensure this is the case, with chosen loved ones acting in your best interests if you’re unable to make life decisions independently.

Taboo Subject

So why are we avoiding or putting off dealing with this issue? Well, for many of us, death, disability and illness are uncomfortable subjects to discuss or even think about.

Yet it’s something that affects all of us at some point, so it’s something that can’t be left to chance.

Interestingly, an estimated 40% of adults in the UK have a Will, according to the OPG, which means many of us are happy to think about what happens to our finances and assets after our own death.

But many people appear to be overlooking what would happen if we aren’t able to make financial or healthcare decisions while we’re still alive.

Have The Conversation Early

While we won’t pretend that bringing up the subject of Power of Attorney with loved ones is easy, it can be made far less stressful by doing it in good time.

Discussing the subject well before there is any need for it ensures all issues are addressed without urgency, with every family member having time to understand their roles and responsibilities.


What Will Rishi Sunak Say in his Budget?

Chancellor of the Exchequer Rishi Sunak is expected to deliver his Spring Budget on March 23rd, in which he’ll outline his view of the country’s fiscal position.

Mr Sunak has long been keen to stress that the money spent on the Government’s coronavirus economic support packages, such as the furlough scheme and the Bounce Back Loan Scheme, will need to be paid back eventually.

So with coronavirus restrictions now being removed completely in England, he may believe this is the time to start settling this bill, perhaps through a combination of tax rises and spending cuts.

But this could prove politically difficult in the current climate. For instance, consumer price inflation now stands at 5.5 per cent – its highest level in 30 years. And inflation could rise higher still, with some estimates suggesting it could hit more than seven per cent by April.

That’s led to the very real possibility of households struggling to meet their basic living costs over the next few months, as the cost of everything from energy to food soars.

The Chancellor will have hoped that ending coronavirus restrictions would have kickstarted a renewed period of strong economic growth and consumer confidence.

But the cost of living crisis means his hope for the economy to start firing on all cylinders could be hamstrung before he’s had a chance to pay back the Covid debt.

Mr Sunak has already had to announce new support measures to deal with the cost of living issue, such as a £150 council tax refund for some households and a £200 rebate to help with energy bills.

So will he go ahead with hitting people’s pockets even harder?

The prospect of tax rises in the Budget could prove hugely unpalatable to many, and not just hard-pressed members of the public, as many backbench Conservative MPs will consider low taxes a core part of their political ideology.

That means the option put forward by the Labour Party of hitting oil and gas companies with a windfall tax looks doubtful, even though the likes of BP and Shell have recently announced record profits.

However, at a time when he’s being routinely touted as a possible successor to Boris Johnson as Prime Minister, the option of increasing household taxes will be a big political gamble for the Chancellor.

And of course, the Government has already pledged to proceed with one high profile and hugely controversial tax hike – an increase in National Insurance, which the Government hopes will boost funding for health and social care.

The Government also needs to look at how it plans to fund its net zero strategy, which includes a commitment to end the sale of new fossil fuel cars by 2030, and its flagship Levelling Up strategy, a drive to improve services such as transport, broadband and education across the country, also by 2030.

Even in normal times, the Budget is a delicate balancing act, with the chancellor of the day weighing conflicting priorities, circumstances, pressures and calls to decide on a fair way forward.

But as the country moves from one crisis to another, and the political stakes are so high for the Chancellor personally, this could be a far more tentative Budget than what the Government might otherwise have hoped for, with Mr Sunak potentially going against his political instinct by borrowing and looking to pay back the money some time in the future.

Levelling up
Net zero
Soaring house prices
National Insurance hike

You’ve made the Taxman a million

Publisher, entrepreneur and diplomat, Benjamin Franklin was almost certainly the most-quoted figure of his generation. He is popularly credited with ‘a penny saved is a penny earned’ and, in Advice to a Young Tradesman, Franklin wrote, ‘Remember that time is money’.

In November 1789, Franklin wrote to a friend in France: ‘Our new constitution is now established. Everything seems to promise that it will be durable. But in this world nothing is certain but death and taxes’.

Sadly, the quote was all too prophetic, as Franklin died five months later. ‘Death and taxes,’ though, has echoed down the years, and for the average household in the UK it may be echoing rather too loudly.

According to figures compiled by the TaxPayers’ Alliance, a typical household in the UK will pay over £1m in taxes in their lifetime, and that’s before the now-confirmed increase in National Insurance comes into effect. The study states that the ‘typical household’ will need to work for 18 years just to meet their bills to the taxman. The poorest households, faced with a lifetime bill of £450,000, will need to work for 23 years. 

As has been widely reported, once the National Insurance changes take effect and are added to an increase in dividend tax and the freezing of income tax thresholds, the tax burden in the UK will swell to its highest level since Clement Atlee’s Labour Government of the 1950s. 

Let us return to the wisdom of Benjamin Franklin: ‘a penny saved is a penny earned.’ Given the last paragraph, we might well amend the quotation to ‘a penny not paid in tax is a penny earned’.

Of course, we have to pay our taxes and tax evasion is rightly a crime. But arranging your affairs and your financial planning so that they are as tax efficient as possible is emphatically not a crime. It is simple common sense and it is an area where working closely with your financial adviser can pay significant dividends. 

Whether it is your pension, your savings and investments, capital gains tax or inheritance tax, a good, independent financial adviser can help reduce your tax liabilities and make sure that everything is part of a comprehensive, tax-efficient, long-term financial plan.

What holds good for individuals holds good for businesses as well. As all our corporate clients know, we are more than happy to work with your accountants and other professional advisers to make sure your company’s affairs are as tax efficient as your personal ones. 

Don’t ever hesitate to contact us if you have any questions: death and taxes may be inevitable, but efficient and effective planning can at least make the second one a lot less painful. 

Typical British household pays £1m in tax during lifetime
Sunak to replace Johnson?
Sunak could scrap NI rise

Do You Know When the Pension Age Moves from 55 to 57?

The minimum pension age for accessing workplace and personal retirement savings is set to go up from 55 to 57 in 2028 – a change that could have a big impact on people’s retirement planning decisions.

But a new study has found that less than one in five people in their 40s are actually aware of this upcoming change.

Figures from the Pensions Management Institute (PMI) also show that just four per cent of people in their 40s actually know that the current minimum age for accessing private pensions is 55.

So what does this mean? Firstly, the findings suggest that many people in their 40s lack basic knowledge about the pensions rules, and secondly, that many could be caught out when they turn 55 and find that they can’t access their private pensions.

As the PMI warns, many people seeking to draw benefits as soon as they can “may be shocked to learn that they will have to wait”.

To make the situation even more complicated is the fact that the changes won’t apply to everyone.

The PMI points out that members of some private sector schemes and those who are paying into public service pension plans will continue to have a pension age of 55 after 2028.

Responding to the PMI’s concerns, a government spokesperson said the change in the normal minimum pension age to 57 was announced in 2014.

This, they said, was 14 years in advance of the change and “gave people time to make financial plans”.

However, it is clear that a significant proportion of the general public are not aware of this major change in pensions policy, which President of the PMI Lesley Alexander believes is “particularly worrying”.

“It is vital that the general public understands clearly what their retirement choices are,” she said.

The PMI has called on the government to launch a new communication programme as a matter of urgency, so the situation is clearly explained to the wider public.

Ms Alexander added that this needs to happen before the pensions dashboard, giving people the facility to view all their pension savings in one place, is introduced in 2023.

Otherwise, she believes there will be widespread confusion “when people learn that they will become eligible to draw benefits at different ages”.

The government has described the introduction of the pensions dashboard as a step that will revolutionise how consumers keep track of their pension information, as it will put the saver “more in control” and transform “how they think and plan for their retirement”.

However, the widespread lack of awareness of upcoming changes to pension policy suggests a problem is looming, and points to why it’s so important to get financial advice from an experienced, qualified specialist who is closely following regulatory and policy changes.


No longer a nation of shopkeepers?

Napoleon is often quoted as deriding Britain as ‘a nation of shopkeepers.’ In fact, the phrase was first used by the French Revolutionary, Bertrand Barère de Vieuzac in 1794 – and while the phrase may have been intended as an insult, there’s another side to the coin: hardworking, local, small-scale enterprises that served the community and provided jobs. 

But is that now coming to an end? 

According to analysis from Rest Less – which offers advice to older people – two years into the pandemic the UK has nearly 700,000 fewer self-employed people than at the peak in 2019. Two years ago there were 5m self-employed: that figure has now shrunk to 4.3m. 

It has to be said that changes to legislation have seen many previously self-employed contractors move to company payrolls, but that is still a significant drop. 

So has the UK lost its entrepreneurial spirit? Clearly a ‘nation of shopkeepers’ could now be interpreted as a nation of artisan bakers, web designers, photographers, hairdressers and a host of other professions. But the question remains: has the pandemic made people in the UK more security conscious – less willing to take the risk of ‘going it alone’?

The analysis from Rest Less shows that the number of self-employed workers fell across all age categories in the past two years, apart from those in their 70s and 80s. Interestingly, the 50-59 age group has more self-employed workers than any other age group. 

Stuart Lewis, founder of Rest Less, said, “The self-employed workforce has gone through a tumultuous couple of years [but] self-employment remains an attractive option for many workers in their 50s, 60s and beyond.” 

It is easy to see why younger people – with mortgages to pay and families to raise – will find the security of employment attractive in the current climate. It is also easy to see why self-employment is attractive later in life, especially if you have been offered an early retirement package. At that stage of life, perhaps the mortgage is paid off and the children have left home. 

Some of our more mature clients have gone down that route, now doing the job they were previously doing as an employee on a self-employed, consultancy basis. One thing we would stress though, is that going self-employed – at any stage in life – requires careful financial planning. There are clear implications for your pension and for taxation. There are questions around whether you trade on a self-employed basis or set up your own limited company. If you’ve taken a lump sum as part of a redundancy package, there may also be investment considerations. 

Moving from being employed to setting up your own business is a tremendous – and exciting – challenge. But it may represent a major change to your long-term financial planning goals. We are more than happy to talk through all the implications with any clients or potential clients who might be considering taking that step – whatever type of ‘shop’ you are planning to open…


Will you keep working after turning 65?

Many of us dream of retiring early and spending our post-working life indulging in our hobbies and passions. But since the state pension age went up from 65 to 66 between late 2018 and late 2020, employment rates among 65-year-olds have reached record highs.

According to a report from the Institute for Fiscal Studies (IFS), the increase in employment among this age group since the change was implemented is as big as the one that occurred between 2005 and 2017.

Laurence O’Brien, a Research Economist at the IFS, described the increase as “striking”, so why exactly is this happening?

The IFS data suggests that the sharp increase in employment among 65-year-olds is being largely driven by people in less affluent areas, and those who have lower levels of education.

Indeed, figures show that since the state pension age went up, the employment rate among 65-year-old men rose by 10% in the most deprived areas of the UK, compared with 5% in the most prosperous areas.

Similarly, in the most deprived places, the women’s employment rate at age 65 went up by 13%, compared with 4% in the most well-off places.

This suggests that without a state pension, people living in less affluent parts of the country wouldn’t be able to afford to retire, or at least enjoy the kind of lifestyle in retirement that they’d wish to have.

It also points to a lack of financial education in these locations, with many lacking not only the means, but also the knowledge of how to prepare their finances for retirement in advance.

Another point to stress is that the effects of the state pension increase on men and women have not been the same.

Since the change was made, an extra 7% of 65-year-old men have stayed in paid work, compared with 9% of women in this age group.

While the report applies a broad brush to large numbers of people, it is clear that socio-economic and demographic factors are continuing to have a profound impact on the life decisions people feel able to take across the UK.

However, there was a ray of light in the IFS report, with figures showing that most people who decide to delay retirement since the increase in the state pension age are likely to be financially better off.

The report notes that these people would only need to work about 20 hours a week at the National Living Wage to compensate for losing their state pension income, and most 65-year-olds are earning more than this every week.

But crucially, it states that they also miss out on the many benefits of retirement, such as enjoying lots of leisure time, as a result of working for longer.

Figures showed that 65-year-olds are working 1.8 million hours a week extra since the state pension age was increased – a measure of just how much precious time they’re missing out on because they’re still working.