How the lifetime allowance reduction could impact on your retirement savings

The Government has introduced comprehensive reforms to the pension rules over the previous few years. One important change, which may have been overlooked by some savers, is the reduction of the lifetime allowance that applies to pension savings. The lifetime allowance is the total amount you can hold within all your pensions without incurring an additional tax charge when you extract money from the pot.

Inflationary increases

The Government has indicated that this allowance will increase each year in line with inflation (CPI) but only from 6 April 2018. It was reduced from £1.25m down to £1m from 6 April 2016. If you have more than £1m in your pension pot or are likely to do so at retirement, you can apply to protect it against reductions to the lifetime allowance. Read more…

Do you have a financial plan in place to help protect your home?

Taking out a mortgage is the biggest financial commitment many of us will ever make, and having a financial plan in place will help protect your home in the event that you can’t work due to illness or ill health, or even your premature death.

No life cover

So it’s concerning to see that half (50%) of the UK’s mortgage holders have no life cover in place, meaning that 8.2 million[1] people are leaving themselves and their families financially exposed if the unforeseen were to happen. Read more…

Start thinking about preparing for any big events as soon as you can

None of us know exactly what life’s got in store for us, but we know that there are a handful of major events that we’re quite likely to encounter at some stage. These include some of the great milestones of life, such as buying a property, getting married, starting a family, buying a holiday home or planning for retirement.

It’s essential to start thinking about preparing for any big events as soon as you can. Often this means saving for major expenses that may not yet be in sight but which we know are awaiting us just over the horizon. Read more…

Understanding why your lifestyle makes it more relevant and real

From the old adage of saving for a rainy day to planning for a comfortable retirement, before you can actually define your investing goals you need to ask yourself what you want to achieve.

While deciding on the best fund, tax regime, pension or investment is a necessary part of the financial planning process, it’s crucial to understand what these mean to you – and your lifestyle makes it more relevant and real. Read more…

Importance of not losing sight of your long-term savings goals

The UK is entering uncharted territory after the EU referendum, but with relatively few unretired people beyond the age of 55 having started their retirement planning it is important not to lose sight of your long-term savings goals. Changing social, political and demographic factors mean that the outlook for retirement finances in the UK is constantly evolving.

Worryingly, barely one in three (36%) unretired over-55s had started their retirement planning during Q2 2016 – the lowest percentage since Aviva’s Real Retirement Report began tracking this data two years ago, the latest report reveals. Read more…

Economic and financial outlook

As a result of the UK voting for Brexit (apart from the political turmoil), sterling has dropped significantly against the US dollar and the Japanese yen – the new safe haven currency it seems. We have a new Prime Minister and cabinet and a clear statement from the new Chancellor of the Exchequer that there will be no ‘Emergency Budget’. The normal Autumn Statement and Spring Budget process will be followed.

Restoring fiscal stability

As to what the Autumn Statement and Spring Budget will deliver, we can’t yet know. Read more…

New research outlines typical financial situations

A small number of pensioners are relying on loved ones to help them financially during retirement, and those approaching retirement seem to be in an even worse situation. Yet equally worrying is that people are also far more likely to take financial advice about retirement from friends than from a professional, with more than a million pensioners[1] financially reliant on friends and family, AND the next generation even more stretched, according to the latest research from LV=.

The annual State of Retirement report shows that one in ten pensioners are reliant to some degree on friends and family for financial assistance[2]. While this suggests the vast majority are able to remain financially independent in retirement, worryingly those due to retire within the next ten years are almost three times as likely to be in this situation (27%). Read more…

Britons not planning financially for long-term sickness

Only one in five UK people have income protection cover in the event of becoming too ill or disabled to work according to research published by insurer Zurich. This is despite the fact that as many as 42% have experienced income loss in their working lives due to serious illness. The findings indicate that people still have an ‘it won’t happen to me’ attitude despite having suffered the consequences first-hand.

Raise awareness

Only 19% of respondents claim to have a good knowledge of income protection products, suggesting that more needs to be done to raise awareness of the product’s benefit, including swift access to rehabilitation as well as financial support. This lack of understanding also seems to extend to price, with many overestimating how much cover costs. Over a quarter of respondents said they would be willing to spend 5% of their income on it, though such cover can be bought for significantly less. Read more…

Whether seeking income, growth or both, there are some basic rules to follow

Volatile financial markets are an inevitable part of investing. On a day-to-day basis, the swings in stock market prices can be significant. However, over the longer term, things have tended to smooth out, with daily volatility having a lower impact on overall portfolios.

Market fluctuations

That said, while this has happened in the past, it may not necessarily happen in the future. In the short term, market fluctuations like we’ve seen recently can be unnerving and make you ‘feel’ as if you’re losing money. That’s why it’s crucial at times like this that you focus on staying calm and taking a long-term view, avoiding locking in short-term losses, and making sure you’re properly diversified. Read more…

Choosing a management style that’s right for you

Investors are faced with one of the most basic questions: do you want to put your money in ‘actively’ or ‘passively’ managed funds?

Deciding if you would prefer your investment ‘actively’ or ‘passively’ managed is an important consideration and a useful step towards narrowing your choice of funds to invest in. Your first consideration is deciding how you want your investments managed. Are you looking for a fund that will be impacted by an individual fund manager’s choice of investments? Or are you more interested in keeping charges lower and prefer one that simply reflects the performance of a major index, such as the FTSE 100? Read more…