Monthly Archives: October 2023

MAKING MORE INFORMED DECISIONS ABOUT MONEY LEADS TO BETTER FINANCIAL HEALTH IN THE LONG RUN

We readily trust medical professionals with our health and legal professionals with complex legal matters. Yet, some people hesitate when seeking advice on financial matters. This might be attributed to a few different factors.

Firstly, finance can feel incredibly personal and private, leading to discomfort at the thought of discussing it openly. There’s also a common perception that financial advice is only for the wealthy, which isn’t necessarily true.

INFORMED DECISIONS ABOUT OUR MONEY

Secondly, the perceived cost of financial advice can also deter some people. However, considering it as an investment in your financial health is essential. The insights and guidance you gain will help you make informed decisions, saving you money in the long run.

Financial professionals are highly trained and qualified experts like doctors and solicitors. They can provide valuable insights and advice tailored to your unique circumstances and goals. By overcoming any hesitations, informed decisions can be made about our money, potentially leading to better financial health in the long run.

PROVIDING EMOTIONAL SUPPORT

There are numerous benefits to seeking professional financial advice. These range from developing a holistic personal financial plan and regularly reviewing progress towards financial goals to investment diversification, proactive retirement planning and rebalancing portfolios.

Financial professionals also work with clients to create personalised investment plans and can help identify opportunities to help grow wealth. They assist in managing money and mapping out plans for the future, including retirement. Importantly, they provide emotional support, especially during challenging economic conditions, which clients highly value.

FEEL MORE CONFIDENT ABOUT YOUR FINANCES

A recent study highlights that peace of mind and reassurance are the main benefits of seeking professional advice[1]. This emotional support helps clients feel more confident about their finances, particularly during difficult times such as the current cost of living crisis.

The study also found that rising costs have forced many UK households to find an extra £441 a month on average compared to last year. This has caused significant concern, with nearly half (46%) saying they’re incredibly apprehensive about costs.

EXPERTISE HELPS MITIGATE CONCERNS

However, this concern is much less pronounced among those with access to professional financial advice, with only 21% of advised clients expressing concern.

Given the current financial climate marked by high inflation and rising interest rates, financial professionals are crucial in providing guidance and reassurance. Their expertise will also help mitigate concerns related to inflation, market volatility and the impact of interest rates on mortgage payments.

READY FOR EXPERT ADVICE TO SECURE YOUR FINANCIAL FUTURE?
So, if you’ve ever hesitated to seek professional financial advice, it might be time to reconsider. Remember, the goal is to secure your financial future, and seeking advice could be a step in the right direction. For more information, don’t hesitate to get in touch with us.

UNTANGLING YOUR FINANCES AND NAVIGATING THE FINANCIAL ASPECTS OF DIVORCE

Divorce is a complex process that often comes with various financial considerations, and preparing for a divorce is undoubtedly challenging, especially when it involves untangling your finances. The emotional strain can make it difficult to make clear-headed decisions, and the long-term consequences may not be immediately apparent.

It is crucial to carefully consider the financial aspects of divorce to ensure you can sustain the lifestyle you desire post-separation. It’s desirable to seek legal and financial advice from professionals specialising in divorce cases. Our team is here to assist you in navigating the financial aspects of divorce.

HERE ARE SOME FINANCIAL CONSIDERATIONS

CREATE A LIST OF ASSETS

Create a comprehensive list of all assets, including properties, pensions, investments, businesses you own and other financial accounts. Include accurate valuations, and be sure to note down both joint and individual assets. Additionally, document your income and outgoings, both joint and individual, to clearly understand your financial standing. This will clarify what needs to be divided and help with accurate valuation.

BUDGET FOR THE FUTURE

Consider your post-divorce financial goals and plan accordingly. Start saving and budgeting in advance to align with the life you envision for yourself after the divorce. Remember that what you desire financially from the divorce may not necessarily align with the outcome. Obtain a copy of your credit report, especially if you anticipate needing a new mortgage or taking on new financial responsibilities. A credit report will provide insight into any joint lending or liabilities you may still be responsible for after the divorce.

CONSIDER THE DIVISION OF YOUR HOME

There are several options for dividing your home, such as selling it, one partner buying out the other’s share or maintaining joint ownership until certain circumstances arise. It’s important to consider the financial implications of each option. Keeping the home may be challenging, especially if managing mortgage repayments on a single income becomes difficult. Consult a financial professional to assess the financial viability of each option.

SEEK ADVICE ON SPLITTING PENSIONS

During divorce proceedings, it is essential to consider the division of pension savings, often overlooked in favour of other assets like the family home. Dividing pensions can have long-lasting effects on your financial security. There are two commonly used methods for dividing pensions during a divorce or separation. Pension sharing involves splitting one or more pensions between the separating partners. Alternatively, with pension offsetting, the value of the pension rights is balanced against other assets, such as property or savings. This approach allows for a more flexible and customised asset division based on the separating partners’ unique circumstances.

EVALUATE SAVINGS AND INVESTMENTS

The process is usually straightforward when splitting cash savings accounts during a divorce. One partner can transfer money from their account to their ex-spouse’s account. However, if you have Individual Savings Accounts (ISAs), you or your ex-spouse would need to withdraw the money first and then provide it to the other partner. It’s important to note that dividing investments and savings may have tax implications and involve charges. Therefore, seeking professional financial advice is crucial to ensure that the division is done appropriately and is financially beneficial.

BE AWARE OF CGT LIABILITIES

Capital Gains Tax (CGT) may apply when transferring assets during a divorce. As of 6 April 2023, new rules have been implemented that extend the time frame for separating partners to transfer assets without incurring CGT. Under the new rules, you now have up to three years from the end of the tax year in which you separate to make these transfers without facing CGT liabilities.

FINANCIAL PLANNING

NEED PROFESSIONAL ADVICE TO TAKE THE FIRST STEP TOWARDS A SECURE FINANCIAL FUTURE?
Regardless of your specific needs, we are committed to providing the support and guidance you require during this challenging time. We understand the complexities of divorce and finances and are here to help you make informed decisions. Contact us today to schedule a consultation and take the first step towards a secure financial future.

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. YOUR OWN PERSONAL CIRCUMSTANCES, INCLUDING WHERE YOU LIVE IN THE UK, WILL HAVE AN IMPACT ON THE TAX YOU PAY. LAWS AND TAX RULES MAY CHANGE IN THE FUTURE. SEEK PROFESSIONAL ADVICE.

PLANNING FOR YOUR LIFE AFTER WORK TO ENSURE A FINANCIALLY SECURE FUTURE

Retirement planning is an important step to ensure a financially secure future. When calculating how much you’ll need to live on in retirement, there are various factors to consider. Everyone’s circumstances are different.

While the general rule of thumb suggests aiming for around two-thirds of your final salary at retirement after taxes, it’s crucial to consider your requirements and desired lifestyle. Some individuals may need more or less depending on housing costs, healthcare expenses, travel plans and other lifestyle choices.

It’s essential to assess your situation and obtain professional financial advice to determine the appropriate amount to fund your desired retirement lifestyle.

HERE ARE FIVE KEY QUESTIONS TO ASK YOURSELF WHEN PLANNING FOR YOUR RETIREMENT

1. WHAT DOES MY IDEAL RETIREMENT LOOK LIKE?

Consider what you want to do in retirement and how you envision spending your time. Whether travelling, pursuing hobbies
or spending time with loved ones, understanding your retirement goals will help you plan accordingly.

2. HOW MUCH WILL IT COST?

Evaluate your expected expenses in retirement by categorising them into essentials and non-essentials. Essentials include housing costs, utility bills, insurance and everyday living expenses. Non-essentials may include leisure activities, travel and entertainment.

3. WHAT SIZE PENSION DO I NEED?

Once you estimate your required retirement income, you must determine how much savings you’ll need to generate that income. This calculation considers life expectancy, investment growth, tax implications and inflation. Obtaining professional financial advice will assist you in determining the appropriate pension size for your retirement goals.

4. ARE MY EXISTING SAVINGS ENOUGH?

Assess your current savings and investments to determine whether they are sufficient to meet your retirement goals. If there is a shortfall, consider strategies to boost your pension savings, such as increasing contributions or extending your working years. Additionally, evaluate other potential sources of retirement income, such as Individual Savings Accounts (ISAs) or the State Pension.

5. AM I ENTITLED TO STATE BENEFITS?

If you have made 35 years of National Insurance (NI) contributions through work or by claiming certain benefits, you are entitled to claim a State Pension from age 66. The full new State Pension is now £203.85 a week (tax year 2023/24). And if you reached the State Pension age before April 2016 and are on the older basic State Pension, you will now receive £156.20 (tax year 2023/24). However, it’s important to note that this amount may not be sufficient to fund a comfortable retirement and may fall below the essential income level for many individuals.

WANT TO PLAN YOUR RETIREMENT INCOME STEP BY STEP?
Retirement planning can be complex. By taking proactive steps and making informed decisions, you can work towards a financially secure and fulfilling retirement. Please get in touch with us to find out how we can help you put in place the right retirement plans for your future.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE 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.

YOUR OWN PERSONAL CIRCUMSTANCES, INCLUDING WHERE YOU LIVE IN THE UK, WILL HAVE AN IMPACT ON THE TAX YOU PAY. LAWS AND TAX RULES MAY CHANGE IN THE FUTURE.

CHOOSING THE BEST OPTION FOR YOURSELF OR YOUR LOVED ONES

The costs of care in later life can vary greatly and depend on a multitude of factors. Notably, the type of care required, the individual’s financial situation and their location within the UK play a significant role in determining these costs.

Many underestimate the true extent of care home costs and fail to plan for them adequately. However, a comprehensive wealth strategy can provide essential financial preparedness for long-term care. In England, individuals with assets worth more than £23,250 are typically expected to pay their own care home costs unless they have significant ongoing health needs.

BRING PEACE OF MIND

It is crucial to consider contingency plans for care costs, whether that involves a care home or care at home. Having funds earmarked for later-life care can bring peace of mind and enable you to choose the best option for yourself or your loved ones.

You can explore various strategies to address care costs, including Inheritance Tax planning and annuities for care home fees. Seeking expert professional advice can help you establish a ‘care costs plan’ that provides peace of mind and eliminates worries about managing care home expenses when the time comes.

TAKING A HOLISTIC VIEW

If your circumstances change and residential care becomes necessary for you or another family member, taking a holistic view of your overall wealth is essential. By doing so, your professional adviser can create the right financial plan to support you throughout the rest of your life. This may involve care home tax planning for capital maintenance, assistance with inheritance plans, or utilising an annuity for care home fees.

Deciding on the best course of action for care can be stressful, especially when determining how to finance it. It’s natural to feel overwhelmed by the numerous decisions and unsure of where to start or who to consult. However, seeking guidance from professionals experienced in long-term care planning can alleviate this burden and guide you towards a secure financial future.

WHEN IT COMES TO MAKING PLANS FOR CARE AT HOME, HERE ARE SOME STEPS YOU CAN TAKE:

Assess your current situation: Start by evaluating your or your loved one’s needs for care. Consider the required assistance level, such as medical support, personal care and household tasks. Assess any specific health conditions or limitations that need to be addressed.

Research available resources: Look into the options and resources available for home-based care. This may include home healthcare agencies, community support services and government programmes. Research the types of care providers, their qualifications and their services.

Create a care plan: Develop a comprehensive care plan that outlines the specific services needed and the frequency of care required. Include details on medication management, therapy, meal preparation and other specific needs. Consult with a healthcare professional such as your GP, or a care coordinator to assist you in creating an effective plan.

Budgeting and financial planning: Determine the financial implications of home-based care. Consider the costs associated with hiring caregivers, purchasing medical equipment, modifying the home for accessibility, and any ongoing medical expenses. Review your financial situation and explore options like long-term care insurance or veterans’ benefits.

Seek professional advice: Consult with a professional financial adviser who can provide guidance on financial planning and long-term care options. They can help you understand the costs, explore potential funding sources and create a sustainable financial plan.

Communicate with family members: Discuss your intentions and plans with your family or close friends. Involve them in the decision- making process and ensure everyone is on the same page. Consider their availability and willingness to contribute to caregiving responsibilities or financial support.

Remember, each individual’s situation is unique, and it’s essential to tailor your plans according to your specific needs and circumstances. It’s recommended to consult professionals who specialise in eldercare and financial planning to ensure you make informed decisions.

CONCERNED ABOUT HOW TO PAY FOR CARE IN LATER LIFE?
Planning for care in later life is a crucial aspect of financial wellbeing. It’s important to consider various options and strategies to ensure you have the necessary funds to cover care expenses, whether at home or in a care facility. To discuss your options, please contact us for more information.

THE COST OF CARE COULD REDUCE YOUR PERSONAL WEALTH SIGNIFICANTLY AND ALTER ANY PLANS YOU MIGHT HAVE TO LEAVE AN INHERITANCE TO YOUR LOVED ONES.