Category Archives: retirement

retirement category

Saving for retirement: what’s the magic number?

It’s easy to push saving for your retirement to the back of your mind. Future events have a habit of feeling very distant, until they arrive. It can be a difficult thing to keep track of too; with nobody helping you along the way or checking up on your savings, putting a retirement plan in place can be a lonely experience. Continue reading

The longevity challenge and how to tackle it

In the UK, we are faced with the challenge of an ageing population. Many of us will live longer than we might have expected. Already, 2.4% of the population is aged over 85. Because of improvements in healthcare and nutrition, this figure only looks set to rise.

The Office of National Statistics currently estimates that 10.1% of men and 14.8% of women born in 1981 will live to 100. A demographic shift to an older population brings unprecedented change to the way the country would operate, from the healthcare system to the world of work.

In addition, a long life and subsequently a long retirement, bring challenges of their own from a personal financial planning perspective.

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What do you need to consider regarding a defined benefits pension transfer?

Pensions freedoms introduced three years ago mean that people are able to do what they like with their retirement savings. If you are on a defined benefit (DB) pension scheme you may be offered the opportunity to transfer out of your pension scheme in return for a fixed sum.

DB schemes promise savers a certain level of income after retirement, such as a final salary. Transferring out means that you will usually be offered between 25 to 30 times your annual pension value as a lump sum. However, it could be as much as 40 times. For instance, someone on a £10,000-per-year pension could be offered between £250,000 and £400,000. Continue reading

Funding care home costs with a care home ISA

If you’re under 60, funding your future care might not be top of your agenda. Garden improvements, good restaurants and holidays probably rank slightly higher, as well as saving for your pension if you’ve not yet retired.

However, the government could be proposing a new ISA in order to encourage people to start saving for their later life care. Recent leaked government documents suggest that the government is considering a Care ISA as part of its forthcoming green paper on social care. Continue reading

Are children’s pensions as good as they seem?

Pensions for children? Surely that’s taking planning ahead to a whole new level?

Nonetheless, if you can afford it, putting money aside in to a pension for your children or grandchildren can be a sensible option.

Under the current rules, you can put £2,880 a year into a junior self-invested personal pension (SIPP) or stakeholder pension, on their behalf. Even though the child won’t be a taxpayer, 20% is added to the amount in tax relief, up to £3,600 per annum. If you think about it, that can result in quite a significant amount over the years, taking compound growth into consideration. Continue reading

4 top tips to protect yourself against pension scammers

You may well have seen the headlines that victims lost an average of £91k each in pension scams last year. Worryingly, in a recent survey, 32% of pension holders aged 45-65 said they were unsure how to verify if they were speaking to a genuine pensions adviser. Scammers are becoming increasingly sophisticated. They can be articulate and sound highly knowledgeable. They will have designed seemingly attractive offers to try and persuade you to transfer your pension pot or release funds from it, which they will then invest in high-risk investments like overseas property, renewable energy bonds or forestry – or simply steal it directly. Continue reading

Is buying a state pension top-up worthwhile?

As part of your overall financial planning, one item that is worth considering is your state pension and whether you are on track to get the full amount. If not, it is possible to buy top-ups, which could boost your payout by £244 a year for life.

The 2017/18 voluntary payment, under the Class 3 National Insurance top-up scheme, costs £741 and will get you nearer to, or over, the threshold for the maximum state pension payout – currently £164.35 a week. Such an opportunity can be particularly relevant for those who have contracted out of part of the state pension at some point previously during their working life. Continue reading

Are you keeping track of your pension pot?

Hand writing the text: Whats Your Plan for Retirement?

Keeping track of your pension pots can feel like a full time job at times, particularly as we head towards a world where the average person will have eleven different jobs over the course of their career. It’s becoming increasingly uncommon for people to stay in the same job throughout their employment. In fact, we’re now seeing that 64% of people have multiple pension pots; that’s up 2% since October 2016. While that in itself is not a worry, what is more troublesome is that of that 64%, 22% have reportedly lost track of at least one of those pots.

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Record numbers make the most of pension freedoms

Hand writing the text: Whats Your Plan for Retirement?

The people have spoken and they love freedom! Recent figures show withdrawals in the 2017-18 year were worth £6.7bn, the highest figure since the pension freedoms reforms were introduced in 2015.

Before the change in legislation, the majority of pensioners would purchase an annuity with their pension pot, which would guarantee them an income for life.The pension freedoms now mean that those over the age of 55 have access to their savings and more choice and flexibility over how they fund their retirement. Continue reading

Why it pays to retire early

Sound financial planning is not only good for your bank account – it could actually improve your life expectancy. If you’re reading this then you probably don’t need to be convinced of the benefits of looking after your money, but here’s another reason to add to the list.

The idea of retiring early can be most appealing. For some, it will already be a reality, while wise saving and investment may mean it’s perfectly achievable for those at the consideration stage. Research now suggests that an early retirement can actually also lengthen your life. Economists from the University of Amsterdam published a 2017 study in the Journal of Health and Economics which confirmed that male Dutch civil servants over the age of 54 who retired early were 42% less likely to die over the subsequent five years, compared to those who continued working.

Researchers put this life-extending phenomenon down to two main factors. First, when you retire you have more time to invest in your health. Whether that means you find more time to sleep, more time to exercise or simply more time to visit a doctor when an issue arises, you’ll see the benefit.

Secondly, work can be a great contributor to stress, creating hypertension which is in turn a huge risk factor for potentially fatal conditions. In the study, retirees were shown to be significantly less likely to fall victim to cardiovascular diseases or strokes.

Of course, there can be benefits to staying in work too. Participating in a work environment is a good way of keeping your mind and body active. On top of that, being part of a team helps develop and maintain a sense of purpose and belonging that is essential to cognitive health and development.

That’s not to say that all these benefits can’t be achieved outside of work; the key is to find a hobby, interest or cause to involve yourself in. As is so often the case, there’s no single solution. It’s important to find the best path for you, whether that’s staying in work, retiring early or going part-time. Whatever you choose, spend your time wisely as it could have a major impact on how long your retirement turns out to be.