Monthly Archives: April 2022

Britons saved almost £4bn as a result of the Omicron variant

New research has highlighted Britons saved almost £4bn as a result of the Omicron variant disrupting social plans during the festive period.

The identification of the new variant and the subsequent surge in positive cases caused many to put festive plans on hold this year, resulting in 35% of people saving money, with an average saving of £212 per person. 1% of people cancelled bigger plans over Christmas, resulting in savings of over £1,000. Overall UK adults saw total savings amount to approximately £4bn.

VARIANT’S EMERGENCE

The data also revealed that those aged between 25 and 34 saw the biggest savings, with 41% saying they had saved money on socialising during the festive period following the Omicron variant’s emergence. Previous research in 2020 found that 18 to 30-year-olds were the most likely to be saving more money as a result of the pandemic, with almost 48% saying they had put more money aside following the first lockdown.

With the cost of living impact becoming ever more prevalent as we move through 2022, many will no doubt be thankful to have saved a few extra pounds from the festive season. Being in control of your finances enables you to manage them more eectively, and eliminates the pressure of worrying about money as you have the sense of security that comes with knowing how much you have available to spend.

FINANCIAL DIFFICULTIES
There will always be times throughout the year when expenditure will vary, so having well-managed finances will allow you to be prepared, regardless of what changes may happen along the way. If you have money set aside for emergencies, you’re far less likely to experience financial diculties or have to borrow at a high interest rate if things go wrong or your circumstances change. Knowing you’ve got some money tucked away might help you sleep better at night too.

Saving regularly is a good way to build up an emergency fund. You’ll find that if you get into the habit of saving each month your savings will soon mount up. There isn’t a one-size-fits-all approach to emergency savings because everyone’s expenses, income and priorities are dierent. Your end goal ideally should be to set aside between three to six months of your expenses.

READY TO EXPLORE YOUR OPTIONS AND DISCUSS THE NEXT STEPS?

Financial planning may seem complex, but it doesn’t have to be dicult. With your goals in mind, we can explore your options and discuss the next steps. To find out more, please contact us.

Questions to help you live your best life in later life

The question, ‘Have I saved enough to retire?’ is a difficult one. It requires a lot of information about you, your family, your income needs in retirement, and an understanding of the various financial vehicles available for saving and investing before it can be answered definitively.

It’s hard to know exactly how much you’ll need in later life because everyone has different circumstances and different expectations. But by planning how much you’ll need, and working out how best to build up your pension pot, you’ll be in a better position to live your best life in later life.

Most people know they should save money to fund their retirement. But they may not know, however, how much money they should be saving in order to retire comfortably. So what should you consider?

Q: WHAT WILL MY LIFE LOOK LIKE WHEN I RETIRE?
While this might seem obvious, it’s easy to forget about all of the little details when thinking about retiring or what your daily life will look like after retirement. Your budget is aimed at having a certain standard of living now, while working. Will that standard of living carry over into your retirement years? Will you need to scale back? Or will you be able to enjoy more of the finer things in life after you retire?

Q: HOW MUCH AM I CURRENTLY SAVING TOWARDS RETIREMENT EACH MONTH OR YEAR?
This is always a good metric to know how well your current savings are holding up, especially since you can compare it with other metrics later on. Saving early means your money is invested for longer and has more time to grow – and any returns your savings make are also reinvested and have a chance to grow too. If you know how much money is being put away for retirement now, it’s easier to estimate how long it will take before that particular goal has been reached.

Q: HOW WOULD MY DAILY LIFE CHANGE IF I HAD LESS INCOME COMING IN?
By looking at your current income and expenditure, you can start to get a picture of what life would look like with a smaller income. Your expenses will likely decrease as you retire if it’s only necessary to pay for the essentials, such as housing, food and utilities. You may be able to save more or spend more on things that make you happy (within reason). If most of your lifestyle doesn’t change much after retirement, chances are that you’re doing all right with your savings. But be mindful that people are living longer than ever, and that will create some challenges for retirees.

Q: HOW LONG WILL MY MONEY LAST IN RETIREMENT?
This is where it starts getting complicated because there are several questions involved: How much money do we plan to live on each month (that includes any and all expenses)? How long will that money need to support us? How much income do we expect to have throughout retirement? It may take several years of research, but being aware of your ‘magic number’ for retirement is a good way to see how well you are doing with saving. Turning your dreams into reality will take careful planning
and budgeting. Once you’ve got a good idea of your life expectancy, pension pot and any other retirement income, we can help you make an informed decision about when the right time to start your retirement is likely to be.

Q: HOW CERTAIN AM I THAT MY SAVINGS ARE ENOUGH?
No one has an exact answer as to how much money they should be saving towards retirement – everyone’s situation is different. Knowing your savings certainty can help you better understand whether or not it’s enough for your needs. This metric may require some thinking about what type of lifestyle you want in the future, what expenses will change or go away, and how long you might live if nothing changes. Retirement can be a long time, so it’s important to think about how you plan to spend your golden years. The common perception is that you’ll need between half and two-thirds of the final salary you had when you were working, after tax, to maintain your lifestyle once you retire.

NEED HELP PUTTING A RETIREMENT PLAN IN PLACE, AND KEEPING IT ON TRACK?

If it looks like what you have won’t cover the lifestyle you want in retirement or you want to review your current retirement plan, speak to us. We’ll give you peace of mind by helping you put a plan in place, and keeping it on track, so you can make the most of your retirement. Don’t delay, please contact us if you require further information.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS PLAN HAS A PROTECTED PENSION AGE). THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION WHICH ARE SUBJECT TO CHANGE IN THE FUTURE. YOU SHOULD SEEK ADVICE TO UNDERSTAND YOUR OPTIONS AT RETIREMENT.

Staying on track to achieving specific financial goals

All of your financial decisions and activities have an eect on your financial health. To help improve your financial health during this period of rising inflation and interest rates, we look at three areas that could help keep you on track to achieving your specific financial goals.

BEAT THE NATIONAL INSURANCE RISE

The National Insurance rise from April this year is going ahead for workers and employers despite pressure to reverse the decision to increase this by 1.25%, which is aimed at raising £39 billion for the Treasury. From April 2023, it is set to revert back to its current rate, and a 1.25% health and social care levy will be applied to raise funds for further improvements to care services.

One way to beat the National Insurance increase is by taking advantage of salary sacrifice, which means you and your employer pay less National Insurance contributions. Some employers may decide to maximise the amount of pension contributions by adding the savings they make in lower employer National Insurance contributions (NICs) to the total pension contribution amount they pay.

This is also a way to make your pension savings more tax-effcient. If you choose to take up a salary sacrifice scheme option, you and your employer will agree to reduce your salary, and your employer will then pay the difference into your pension, along with their contributions to the scheme.

As you’re effectively earning a lower salary, both you and your employer pay lower NICs, which could mean your take-home pay will be higher. Better still, your employer might pay part or all of their NICs saving into your pension too (although they don’t have to do this).

REVIEW YOUR SAVINGS ACCOUNTS AND RATES
Money held in savings accounts hasn’t grown much in recent years due to historically low interest rates. But with inflation running higher, your savings are now at risk of losing value in ‘real’ terms as you’ll be able to buy less with your money.

In some respects, inflation can be seen as a positive. It’s a sign of strong economic recovery post-COVID, increasing salaries and higher consumer spending. But it’s bad news for your cash savings. Relying solely or overly on cash might prevent you from achieving your long-term financial goals, which may only be possible if you accept some level of investment risk.

In an environment where the cost of living is rising faster than the interest rates received on cash, there is a danger that your savings will slowly become worth less and less, leaving you in a worse position later on.

If you have money in savings, it is important to keep an eye on interest rates and where your money is saved. Rates are low and you will lose money in real terms if inflation is higher than the interest rate oered on your savings account or Cash ISA.

SHIFT LONGER-TERM SAVINGS INTO EQUITIES

During times of high inflation, it’s important to keep your goals in mind. For example, if your investment goals are short term, you may not need to worry much about how inflation is impacting your money. But if you’re investing for the long term, inflation can have a larger impact on your portfolio if it’s sustained – although high inflation that only lasts for a short period may end up just being a blip on your investment journey.

If you have large amounts of money sitting in cash accounts one way to beat inflation is to invest some of your money in a long-term asset that will appreciate with time, thus increasing your buying power over time. There are many ways to invest your money, but most strategies revolve around one of two categories: growth investments and income investments.

Historically, equities have oered an eective way to outperform inflation. Cyclical stocks – like financials, energy and resources companies – are especially well-suited to benefit from rising prices. These sectors typically perform better when the economy is doing well, or recovering from a crisis.

Depositing funds into your investment portfolio on a regular basis (such as monthly from salary) can help you invest at dierent prices, averaging out the overall price at which you get into the market. Known as pound-cost averaging, this can help you smooth out any fluctuations caused by market volatility over the long term. While volatility will always exist, it can be managed and reduced by taking this approach.

LET US HELP CHART YOUR PATH THROUGH LIFE

The most effective way to make the most of your money is by receiving professional financial advice. We can help you chart your path through life, ensuring you are financially ready for every stage. To discuss your requirements, please contact us for more information.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS PLAN HAS A PROTECTED PENSION AGE). THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION WHICH ARE SUBJECT TO CHANGE IN THE FUTURE. YOU SHOULD SEEK ADVICE TO UNDERSTAND YOUR OPTIONS AT RETIREMENT.