£450K PENSION POT NEEDED TO RETIRE WELL |
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Recent research1 has shown that savers on an average salary need a pension pot of £447,000 to retire comfortably at the age of 65. This sum would fund their retirement until they were 100 years old, the research suggests.
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MIND THE PROTECTION GAP |
Data from financial software firm IRESS has revealed a substantial difference in protection sums assured across the gender divide, raising concerns that women are at risk of being underinsured2. Although the gender pay gap means that a certain divide may be expected, IRESS confessed itself surprised by the extent of the differences.
Although the research reported the number of men and women taking out protection insurance to be broadly similar, the sums assured for each gender differed. For life and critical illness cover, the sums assured for men were found to be 50% higher. The disparity for critical illness cover was typically 90%, with the average male sum assured being £10,985 against £5,790 for their female counterparts. DO YOU HAVE THE RIGHT COVER?Protection cover should be a fundamental part of people’s financial planning and needs to be regularly reviewed. If you are concerned that your level of cover may not be adequate, get in touch to review your protection needs. 2IRESS, July 2019 |
NEXT GEN FINANCIAL LESSONS |
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IN THE NEWS… |
INTERGENERATIONAL GAINSPeople under the age of 30 are spending 7% less on non-housing items, when compared with the same age group in 20013. However, the spending of those over 65 has risen by 37%. The research highlights that the large gains in living standards previously experienced from one generation to the next are now ‘less of a given’. CREDIT CARD DEBT THROUGH THE ROOFWith lower interest rates fuelling a decade-long consumer borrowing binge, it’s unsurprising that recent Bank of England figures detail UK credit card debt now standing at a record £72.9 billion. However, the data confirms that there has been a slowdown in the growth in borrowing, suggesting people have begun to moderate their spending. IS CASHLESS KING?The decline of free-to-use ATMs and continuation in bank branch closures have been key drivers in the rise of contactless payment. This trend continues to gain momentum, with church collection plates amongst the latest to adopt new payment technology. 3Resolution Foundation, June 2019 |
INVESTMENT RISK AND VOLATILITY – KEEP CALM |
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![]() KEEP YOUR FINANCES HEALTHY WITH THESE TIPS |
Take control of managing your finances with some practical tips that could really pay off in the long run.
KNOW YOUR MORTGAGE INTEREST RATEIf you’re currently paying at your lender’s standard variable rate, there could be a better deal out there. It pays to shop around, as your mortgage is likely to be your most significant outgoing and remortgaging could really make a difference to how much of your monthly income is available for discretionary spending. KEEP PAYING INTO YOUR ISAWith the 2019-20 ISA allowance standing at £20,000, this is a perfect opportunity to get some tax-efficient savings under your belt. Different ISAs serve different requirements – we can help you pick the best one for you. MAKE SURE YOU HAVE SUFFICIENT HOME CONTENTS COVERDon’t risk being underinsured – if your possessions are worth more than the sum insured, your insurance company may decrease your payout in the event of a claim (in addition to any agreed excess amount on your policy). Consider reassessing your cover and increasing it if you feel it no longer matches the value of your contents. DON’T LOSE TRACK OF YOUR PENSIONMost people move jobs at least a few times during their lifetime and may have paid into several different pensions as a result. If you need advice on your entitlements and whether it may be beneficial to consolidate your pensions, we can help. KNOW YOUR STATE PENSION AGE AND ENTITLEMENTThe government’s website has a page where you can view a forecast of the state pension you’re likely to get and when you’ll be entitled to receive it, so check if you’re not sure: https://www.gov.uk/check-state-pension A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation. The value of investments and income from them may go down. You may not get back the original amount invested. |
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JISAs – A POPULAR CHOICE FOR MANY |
With intergenerational wealth planning high on many families’ agendas, the popularity of Junior ISAs (JISA) continues to increase, as nearly 15% more plans were subscribed to in the 2017/18 tax year, when compared with the previous tax year – a significant increase for a product that has been around for almost eight years. The flexibility of the JISA to fit into financial plans may be attributable to some of this growth, as families look for different ways to cascade wealth down the generations.
NITTY GRITTYAn individual with parental responsibility for a child under 18 can set up a JISA. However, a huge positive is that anyone can pay into the JISA, including parents, grandparents and godparents, as long as the child’s annual allowance of £4,368 (2019-20 tax year) is not exceeded. Grandparents making larger contributions to multiple JISAs need, in particular, to know that these are likely to be deemed potentially exempt transfers with Inheritance Tax implications. Just like other types of ISA, if the subscription is not fully utilised in a tax year, there is no opportunity to carry forward unused subscriptions. With gains and income from investments and savings exempt from Income Tax and Capital Gains Tax, it’s good news all round. In normal circumstances, savings and investments held in a JISA cannot be accessed until the child reaches 18. |
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INFRASTRUCTURE INVESTMENT EXPLAINED |
We’re all familiar with the word ‘infrastructure’, the basic systems and services that a country needs to function, from the roads you drive on, the airports you travel to and from and the energy and communication networks that are essential for enabling productivity in any modern economy, but how can you invest in infrastructure?
Capital outlays for infrastructure projects can require vast sums of money, which is why governments have turned towards the private sector to help fund these projects. Infrastructure is an asset class which has grown in popularity over the years. Infrastructure is generally regarded as a defensive asset class, which has a low correlation to other assets. Some companies and individuals choose to invest in infrastructure funds because of their defensive characteristics, such as funds involved in water infrastructure or transportation. The value of investments and income from them may go down. You may not get back the original amount invested. |
PRE-FAMILY FINANCIAL PLANNING |
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IF YOU WOULD LIKE ANY ADVICE OR INFORMATION ON ANY OF THE AREAS HIGHLIGHTED IN THIS NEWSLETTER, PLEASE GET IN TOUCH. |
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Information is based on our understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. |