How Much Time Do You Have?
How fast would you travel if you had one hour to travel 60 miles? Answer: 60mph
How fast would you need to travel if you left 10 minutes later? Answer: 72mph
How fast would you need to travel if you left 20 minutes later? Answer: 90mph
How much would you save into a pension if you started now? Answer: Well, that depends on your retirement plans…
According to the Pension and Savings Lifetime Association there are three categories for pension income: minimum, moderate, and comfortable.
Since your pension fund is designed to be your income for when you retire, having a clear savings plan is always the best option. The sooner you start saving into your pension, the longer it has to grow. The better the plan, the more achievable it is.
Not everybody knows exactly when they will retire and that’s okay. The starting point should be to figure out how much you want to retire on. Then look at your current situation, and create a plan to realistically achieve this goal.
Hopefully, you have pension funds already, and know whether or not you are on track. Remember, the investment strategy of five years ago is different to now, so it’s possible that your plans may need to change.
It’s important to review whether you’re in the right pension and/or right funds, and to see if your funds have been affected by the past few years’ lack of growth. If you’re unsure if your pension is on track to achieve your goals or have questions you don’t know the answers to don’t panic. This is what a financial adviser is for.
For some, meeting with a financial adviser may be outside their comfort zone. This may be down to various reasons, but your financial adviser is not here to judge.
They will help you to make the most appropriate decisions for your pension and will assist you on your journey to retirement.
If you would like to speak with one of our pension experts, please call us on 01480 869466 For a free initial, no obligation chat.
Future fees may apply.
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Investment Monthly Round-Up
You can view our Investment Monthly Round-Up for July, written by our Senior Investment Manager, Nicholas Carr, by clicking here
Womens Pensions
When saving in a pension early, the money paid in has the longest time to grow, which for most is beneficial as starting salaries are not typically high. Then contributions made in later years are often of higher value when salaries have increased with career length. However, according to Scottish Widows, this is not the case for everybody. Their ‘Women and Retirement Report’ (2022) shows that women have a significantly lower average pension fund than men: £260,000 versus £137,000.
Women need a pension just as much as men, especially as they live longer on average, yet their final pot is much lower than required. So, you may be asking, why is this the case? Well, research shows that women typically face a triple whammy of pension contribution reductions: Child care, later life care, and divorce.
Firstly, child care is often considered a contributor to the widening pension gap as traditionally it is women who take career breaks, sometimes for years, to raise children. This is not the case for all women but for many, it has an invariable impact on pension savings. Unfortunately, for many this reduction in contributions is not just a short-term gap that they can try to close later on. Depending on home-life circumstances, some women can’t return to full-time work or find they have fewer opportunities to climb their career ladders.
Secondly, later-life care has a similar effect. Again, this may not be the case for every woman, but as noted with child care, they are more likely to make work sacrifices to undertake a caring role. Thus, caring for an elderly parent can also mean reduced hours, reduced pay, or sometimes stop working altogether.
Individually, these breaks can affect the final pot value, even more so if taking both types of care leave or if it is a single-earner household.
Thirdly, an issue that is gaining more attention is that divorce may cause women to experience further pension inequality. When couples divorce, their assets get split but pensions are often overlooked, traded, and in many circumstances not valued at their ‘true’ value. When valuing a pension it is not as simple as looking at its current worth, it needs to be looked at in comparison to the partners.
Make sure you aim to contribute as much as possible, for as long as possible into your pension, starting right from the earliest opportunity. Especially, if you’ve had or are likely to have employment breaks. Experts are working to close this gap, so if you have any concerns about your pension, speak to a chartered or certified IFA, even better if you can speak to advanced pension specialists.
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Care Fees Planning
Care Fees Planning
It has been reported that one in seven people are expected to need care. Anyone involved in the funding of long-term care will know just how expensive it is.
The Office of National Statistics (ONS) now states that women need 2.9 years of care and men 2.2 years. This means that the cost could be anywhere from around £150k to £300k on average. Indeed, some could cost less, but some could also cost more.
The majority of the population don’t appear to have made provisions for care fees instead of relying on their home to cover the costs… Private and state pensions will help towards this, but these are often relied on by the partner who may well find themselves leaving their home and moving in with their child. Which, probably may not be the circumstances that either party would have chosen to happen.
The Government was due to bring in a cap for costs but has so far failed to do so. Thus, it remains that an individual needs total assets of less than £23,250 (including your home) before they can be fully funded by the local authority.
Sorting assets for care payment typically rests with the person holding power of attorney. Though, it is not unheard of for children to assist with this. At Beacon, we have several highly qualified experts who specialise in this area that can assist you.
Our planning not only involves the best way of providing the provisions for funding care costs, but it will also find the best options for other things such as avoiding Inheritance Tax (IHT).
Usually, by the time people require care the seven-year rule for gifting is far too late, and even the two-year rule can sometimes be touch and go. So, we strive to ensure the best possible options for your situation.
If you have concerns about funding your care or the care of a loved one, I would suggest that you start planning sooner rather than later.
To speak with our experts, please call us on 01480 869466 for a free initial, no obligation chat.
Future fees may apply.
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Investment Monthly Round-Up
You can view our Investment Monthly Round-up for May, written by our Investment Manager, Nicholas Carr, by clicking here.
Financial Worries
Financial Worries
With inflation not coming down as quickly as expected, interest rates still going up, and mortgage rates back on the climb, it’s now a goodtime to review your finances.
I’m sure the older generation can remember when mortgage rates were in double figures, but for those with mortgages taken out in the last ten years, these new rates are going to hit hard.
Some standard size mortgage payments are going up £400-£800 per month. Compared to the rates we paid, they seem low, but the amount borrowed today is so much higher.
Many landlords are reviewing their buy-to-let mortgages and are now selling because the rent just doesn’t cover the new loan repayments.
Unfortunately, many companies have taken on extra borrowing due to the lack of sales during and after Covid. So now these companies are having to pay much more in repayments, on top of a higher payroll cost.
Companies also need to look at their structure, as well as individuals. And I am starting to talk to business owners about this concern. Whilst I am finding the demand for this to be low at the moment, it is expected to increase.
Companies, just like individuals, need to take advice early and not wait until it becomes an emergency.
Poor stock market valuations have also curbed the growth expectations and indeed many individuals have seen no growth for a few years.
High inflation, interest rates, and loan repayments –coupled with a lack of investment growth, has lead to many having to review their financial goals and objectives.
My colleagues and I are now helping individuals, and companies, regarding the changes needed to their financial plan and/or investment strategy, which incorporates our in-house investment team.
If you are worrying about your financial plan, talk to one of our Chartered and Certified advisers.
If you would like to speak with our experts, please call us on 01480 869466 for a free initial, no obligation chat.
future fees may apply
Protect and Serve
Protect and Serve
In 2021 more than 150 million working days were lost in the UK due to sickness but research has found only 6% of adults have an Income Protection plan.
What is income Protection?
Income Protection is designed to cover a percentage of your income if you are off work due to sickness or an accident. It can be paid for a limited period or all the way to your retirement.
Government employees have an excellent scheme which normally means that in the event of an illness they receive six months full pay, followed by six months half pay, and then a discretionary period which could also mean an early retirement.
Is it individual or company cover?
Some companies, like mine, have a scheme in place to protect staff incomes.
Whilst for others it is up to individuals to arrange plans for themselves if their company doesn’t offer this as a benefit.
If it is an included benefit, most company schemes will pay for a period of up to two years, which for many is sufficient coverage for accident/illness recovery.
Why does it matter?
Unfortunately, within our company we have had two team members diagnosed with cancer but thankfully both had cover in place, so received income throughout the full time that they were off.
Money is tight for most people given inflation and increasing interest rates but imagine how much worse it would be if you were hit with long term sickness or an accident that meant that you lost your income or even possibly your job…
Increased pay outs of late, due to long-term effects of Covid has proven the importance of having an Income Protection plan.
At Beacon we have found our Employee Benefits department has been receiving more requests for this type of benefit by small to medium sized companies who are recognising the importance of ensuring financial security for their staff.
We never know what’s round the corner, so whilst individuals need to plan for pensions and investments, they also need to plan for the unexpected.
Having cover is always recommended, like a lifebuoy it will protect you and serves to keep you afloat.
If you are interested in reviewing your protection options, please call us on 01480 869466 for a free initial, no obligation chat.
future fees may apply
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How to be an active listener
How to be an ‘Active Listener’
Often in conversation, we can find ourselves not really listening but listening to reply. This means that instead of truly paying attention to what the other person is saying, we prepare our response before they even finish speaking. This is not because we are uninterested but simply because active listening is a learned skill and not typically something many of us do automatically.
Active listening is often described as ‘listening to understand’, which involves going beyond simply hearing the words by making a conscious effort to make meaning of what they have said. Whereas Passive listening is described as ‘listening to respond’, as I mentioned earlier, is a standard way of communicating, but it doesn’t mean that we are fully paying attention.
This simple action of passive listening can stop you from being open-minded, which may lead you to misinterpret, misunderstand or miss a point completely. If we haven’t heard the other person correctly, we will quite often make assumptions. The problem with these assumptions is that they can stand in the way of building a relationship. After all, how stable can a relationship be when built on a foundation of ineffective communication?
When dealing with a Financial Adviser, you need a foundation of active listening. Whilst it is easy to gather basic hard facts like age, address, assets, etc., it is the soft facts that distinguish us from other people. Everybody is different; therefore, it is only natural that we want the most appropriate solution for our personal circumstances. If we feel we are being heard but not listened to, we can lose faith in the solution, even if it is the right one. Nonetheless, active listening and avoiding assumptions work both ways. Clients may make assumptions about the advice, and rather than taking it in, they might find they are missing what is being said so they, too, can fall into passive listening.
Sometimes making assumptions can pay off. It was Henry Ford who said, “If I’d have asked people what they wanted, they would have said faster horses”, which obviously worked out well for the popular car manufacturer. But when dealing with Financial Advisers, you would rather know they have listened and made a detailed, personalised plan according to your best needs – rather than assuming what you might want.
Though maybe I’m just making an assumption…
Professionals are highly qualified, experienced people, but the best ones listen.
You can read more useful articles at News & Useful Articles
Investment Monthly Round-up
May 2023
You can view our Investment Monthly Round-up for May, written by our Investment Manager, Nicholas Carr, by clicking here.
Rented Property Portfolio
Rented Property Portfolio
What’s the news?
In the news last month, Zoopla found that roughly a third of rental properties were sold off, and rents were going up, so this is a huge concern for many.
People who hold buy-2-let properties usually have them highly mortgaged. Typically, this is done to release equity to then put towards further property purchases. Properties are held: personally, in a partnership, or more often now, in a limited company (given the changes to taxation relief).
Mortgage rates have gone up simultaneously as lending has become stricter, and house valuations appear to have gone down.
Those wishing rent
Now there are problems arising for both owners of rented properties and those wishing to rent. Owners buy properties as an investment, usually as well as having a pension, rather than instead of. This means owners look to profit on the rental receipts after the mortgage and maintenance costs, plus the increasing capital value, to tie in with pension growth. With mortgage rates up significantly and no increase in property values, the margins are small to non-existent.
Therefore, this has led to property portfolios being broken up or sold in their entirety. By way of reference, my company has acquired several new clients recently due to property sales.
Unfortunately for tenants, not only are rents rising at their highest rate for about 13 years but there is also considerably less to choose from.
The outcome
In summary, it is a bad time to be a tenant and not much better to be a landlord with big mortgages. One thing helping people today to get on the property ladder (other than the bank of Mum and Dad) is inheritance. Generally, they are more substantial now than in any previous generation, due again to houses being sold.
With older people having mortgages that are due to extend beyond planned retirement, inheritances are also helping to clear balances. However, inheritances should not be relied on, as care homes and funding care are hugely expensive.
If you are unsure whether to sell or buy a buy-to-let or keep it, talk to our Chartered and Certified experts or someone who understands the right options for you and can best help.
Please call us on 01480 869466 for a free initial, no obligation chat.
future fees may apply
You can view more useful articles like this at News & Useful Articles
