Financial Planning, Pensions Advice, Financial Adviser Dunfermline, Fife, Edinburgh and Central Scotland

Thursday 24th May 2018

Giving your children the best start in life is probably one of your top priorities. And, as a parent, it is up to you to teach them about all aspects of life; from looking after themselves, to taking care of everyday responsibilities. Part of that needs to include learning about finances and generating positive financial habits which will last a lifetime.

Most banks and building societies now offer savings accounts for children and, as a bonus, they often have much higher interest rates than adult savings accounts (source: Which?). (more…)

What would happen to your household finances if you or your partner had to give up work from tomorrow?

While time off work is usually something to look forward to, suddenly losing an income due to illness, injury or death would leave approximately 9.79 million households in financial crisis, according to research from The Money Charity. (more…)

Research shows that those nearing pension age are unlikely to be seeking financial advice or comparing different providers and could be missing out on the best rates on their retirement income as a result. (more…)

With just four months to go until the new university year, is your child likely to spend wisely, or blow their entire student loan in the first month?

Anyone who’s been a student knows that excited feeling of receiving a student loan payment. Unfortunately, that elation is often balanced out by the feelings of hunger once that money runs out, and the feeling of time standing still as you wait for the next instalment. (more…)

How many people rely on your pension? If you find yourself regularly giving money to your children and grandchildren, you may be among the 31% of retirees who choose to give part of their income to younger generations. (more…)

Are you counting on getting the same State Pension as everyone else? That might depend on your gender.

According to calculations from Which?, many women receive an average of £29,000 less than men from the State Pension, over the average 20-year retirement. (more…)

We’re almost half way through 2018, and it’s likely that you’ve already thought ahead about some things. Maybe you’re planning a trip abroad during the summer holidays, or you’re a really eager Halloween costume aficionado (and we won’t mention those who are already thinking about tinsel and stockings!). (more…)

Which do you think is growing faster; your salary, or the value of your home?

That depends on where you live and how the market is performing, but the good news is, for the most part, UK salaries are now increasing at a faster pace than house prices.

Less than one in five areas (18%) have seen property values increase more rapidly than average earnings in the past 24 months, according to Halifax.

For years, house price growth has outstripped earnings growth. That’s dangerous as, the high cost of housing, compared to a stagnating income has meant that it has been increasingly hard for first-time buyers in some areas to get a foot on the property ladder.

The fact that house price growth has now been overtaken by the rise in average earnings is therefore good news, especially as we are also seeing real terms wage growth outstripping inflation.

But what does this mean for you?

If you’re a first-time buyer:

Wage rises which are outpacing the growth of property values, is good news for those looking to buy their first home soon. If you’re now enjoying faster growth in your wage, this should give you the opportunity to save more toward your deposit. The extra room in your budget will also give mortgage lenders more faith in your ability to keep up with repayments and could lead to better interest rates being offered.

If you’re a second-stepper:

Current homeowners with a view to moving home face both advantages and disadvantages. When selling your current home, you may find that your property has not achieved the growth necessary to allow you to move to your preferred new home. However, growth in average earnings could ease this somewhat, giving you extra room in your budget for both adding to your savings and making mortgage payments.

In addition, purchasing your second home could be less costly than first thought. In fact, taking advantage of the market whilst it is slow could mean that you are able to afford your next home sooner than you originally planned.

If you’re preparing for retirement:

Getting ready to leave the workplace behind and enjoy some time to yourself is exciting, but how does your home and income factor into that? You may be considering selling you current home and downsizing to release some extra spending money, or perhaps you are thinking about equity release. A slow housing market means that you might not see the returns you hoped for, from your property.

However, the increases in average earnings may enable you to contribute more toward your pension before giving up work altogether. Saving as much as you can now will give you more to support and enjoy your ideal lifestyle later.

If you’re already retired and looking to leave a legacy:

Thinking about what you will leave behind for your loved ones when you die might not be a pleasant task, but it is necessary if you want to avoid leaving your family with a large Inheritance Tax (IHT) bill. The value of your property will inform the decisions you make about what you will leave and how you will do so.

If you are already retired, an increasing average income is unlikely to affect you. However, it may affect the tax payable by your beneficiaries. This is especially pertinent if you will be leaving money in pensions, as they may have to pay Income Tax at their normal rate, which could be higher if they have been fortunate enough to receive regular salary increases.

The other side of the coin

For the 18% who have property which is increasing in value faster than your pay packet, all is not against you.

You may have the benefit of owning a home which is in demand; and being able to command a higher price. So, even though your income may not have seen a dramatic rise recently, you could still finance your big plans, through mortgaging or even downsizing to release equity.

Of course, those options will not be the right fit for everyone, but with the help of a financial adviser or planner, you can find solutions that suit your situation, whichever side of the story you are on.

Do you have a dream retirement age in mind? Most people do.

Unfortunately, many people believe that, no matter how hard they wish to retire on time, they will be beholden to their employer long past the age they’d like to be putting their feet up.

The situation

According to research from Scottish Widows, more than 10 million UK adults estimate that they will need to continue working until they are no longer physically able to do so. Furthermore, three million people say that they have no choice but to work until the end of their life.

Less than a quarter (24%) of people expect that they will have left working life behind completely by the time they reach 65, with the least optimistic outlook held by younger generations.

51% of people expect to remain employed on at least a part-time basis; and just 18% say that this will be down to preference, rather than necessity.

Your options

Retiring at a reasonable age shouldn’t be impossible, but it will mean planning ahead and might mean making some changes to your current financial habits.

1. Know your position

Look at what you are currently doing to prepare for retirement and use a calculator (such as this one) to work out:

  • How much you are likely to have in retirement, without making any changes
  • What age you could retire
  • How much you will need (lump sums and income) to retire on your own terms
  • What the shortfall is

You can then use this information to determine what needs to change between now and the age you want to retire, to ensure that you have enough money to support your desired lifestyle.

2. Save more

Putting more money aside now, will give you more income when you choose to access it. It sounds simple enough, doesn’t it? But, according to the research, 23% of 25-54-year olds are concerned that they are not putting enough away for the future. Meanwhile, 39% fear running out of money completely after they give up working.

3. Take advantage of the helping hands offered

If you are paying into a workplace pension, you already have a great foundation for sensible saving habits. However, for those who have joined a pension through the introduction of automatic enrolment, the minimum contributions made by you and your employer are unlikely to be enough to provide an adequate retirement income.

Currently, your employer must contribute the equivalent of 2% of your pensionable earnings (the income you receive between £6,032 and £46,350 each year), whilst a further 3% is taken from your salary before you receive it. Unfortunately, current expert guidelines state that the average worker will need to put a total 12% of their annual earnings to one side, meaning that many people currently contribute less than half of what they will need to live the retirement lifestyle they aspire to.

4. Repay debts

If you can retire without debt, you will be able to do more with your income. Reducing your living costs as you enter retirement will make a big difference to your ongoing budget. With a smaller portion of your retirement income being lost to repaying debts, you will have more available to enjoy the retirement lifestyle you want.

How you achieve this will differ, depending on your circumstances. But it could include moving into a smaller property, cutting back on non-essential spending and even smaller changes, such as shopping around for better deals from utility providers.

5. Talk to a professional

Engaging with a financial adviser or planner will help you to get on the right track to retiring on your terms; your income and age of choosing.

Research has shown that, those who seek the help of advisers and planners can save up to £98 per month extra toward their retirement income, which could give you an additional £3,654 per year to live on when you stop working.

Planning for retirement can be a daunting task. But, by talking to the right person, you can ensure that you are able to stop working, when it suits you, and with the retirement income you want.  For more information or to get started, why not get in touch with us.

11 million pensioners are targeted by pension-related fraudsters every year (Source: Parliament.uk)

Since the beginning of 2018 alone, 14% of non-retired over 50s have received potential scam communication, according to Retirement Advantage.

Despite the announcement that the Government is working toward a complete ban on pension cold calling, there is little relief for those who are retirees or preparing to retire.

Will pension scams stop?

It is almost impossible to remove the potential for pension scammers to try their luck. Even when cold calling becomes illegal, you will still need to be wary of scammers approaching you by other means, including:

  • Visiting your home
  • Email
  • Letter
  • Text message

How to spot a potential scam

1. Unsolicited contact

If you have not given your information to the person contacting you, they could be attempting to scam you. Similarly, if you receive communication from someone claiming to represent an official organisation, such as Pension Wise or even your financial adviser, we urge you to be vigilant. Put simply, never take financial advice from someone contacting you via cold call or unsolicited approaches, full stop.

2. Unrealistic claims

If you receive anything promising to save you money on tax, release your pension capital early (before the age of 55) or low-risk high-return investments, it’s time to report it. All these claims are simply stories to persuade you to hand over your money.

3. Avoiding questions

If you notice that the person you are talking to tends to avoid questions or give vague answers, or that the message you have received does not contain much detail, the chances are that the person or people contacting you cannot back up their claims. Any official communication will have easily traceable contact details and will welcome any questions you ask to verify their authenticity.

4. Applying pressure

Making it sound like you need to act immediately, without giving you time to think about what you are committing to (or to verify their claims) is a common tactic used by scammers.

If you feel pressured into anything, it is better to say that you need time to think and investigate what they have said more deeply. A legitimate company will have no problem leaving you to do independent research and will probably recommend that you seek independent financial advice before making any decisions.

What to do if you are worried about a scam

Pension scammers are not new, and the attempts to access your money are unlikely to stop just because they can no longer use phone calls to their advantage. If you receive any suspicious communication, you can try to verify the sender’s identity and authenticity by:

  • Checking the Financial Services Register: All financial services companies are regulated by the Financial Services Authority (FCA). Those who are can be found on the register, which contains both companies and individuals operating in the profession. If you cannot find any evidence that the company you have been contacted by is above board, you should be wary.

If the company contacting you does appear on the register, you can double check that it was them who contacted you. This is advisable as there has been an increase in the amount of ‘clone firm’ scams recently; these are run by scammers using a real company’s information to trick customers into handing over money.

  • Putting the company details into a search engine, such as Google: Thanks to the growing popularity of online forums, many people will post public warnings when they have been contacted by, or worse fallen victim to, a scammer.

Often, a quick search of the company name or contact information can give you an insight into the legitimacy of a company.

  • Remember the two golden rules: Never act on a cold call and, if something sounds too good to be true, it probably is!

If you are in doubt, or need to report a potential scam, contact Action Fraud by clicking here.

In addition, feel free to contact your financial adviser or planner, who will be able to verify the source of the contact and advise you as to your next steps and options.

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