Monthly Archives

May 2022

May 20
0

How much pension to retire at 55?

By | Pensions

For many people, retiring in your 50s is a primary financial goal. It can open up freedom to pursue the things you enjoy – such as sports, travel and voluntary work. Yet many people also underestimate how much they need to save to retire at 55. After all, UK life expectancy is over 81 years and, in one year, over 15,000 people may live to over 100. Retiring from 55, therefore, could mean needing a pension that lasts multiple decades. In this article, our financial planning team at WMM explores how much pension you need to retire at 55 – suggesting ideas to help people achieve their goals.

 

How much pension to retire at 55?

Everyone’s income needs are different in retirement. However, studies suggest that in 2022 a couple needs at least £15,700 to cover their basic needs in retirement (or, £29,100 to have a “comfortable” retirement). A single person could live a moderate lifestyle with about £20,000 per year. Assume, therefore, that you retire at 55 and live until 85. This means multiplying these figures by 30, at a minimum, to start to get an idea of how much pension you need to save.

Suppose you need £20,000 per year in retirement. To make this last over 30 years from age 55, you’d need at least £600,000 saved in your pension(s). However, things get more complicated due to different types of pension, as well as inflation.

First of all, most retired people do not simply live on income from a pension “pot” (e.g. from their workplace). They tend to also rely heavily on the State Pension, which comes from the UK government. In 2022-23, the full new State Pension is £185.15 per week (£9,627.80 per year) and requires 35 “qualifying years” on your National Insurance record. This takes away a lot of the pressure to save everything you need for retirement yourself, into a pension pot.

However, secondly, inflation erodes the value of money over time. £20,000 in 2022, for example, will buy fewer goods/services in 2030. This “downward pressure” on the value of your pension pot(s) typically means saving more than you might think you need, to account for the rising cost of living. Fortunately, the State Pension rises each tax year in line with inflation (at minimum). Many “final salary” pensions and annuities also do this. However, you will likely still need to take account of inflation in your pension investment strategy – both before and during retirement.

 

Ideas to retire at 55

To have a chance of retiring at 55, you first need to understand the pension landscape. Pension “pots” can be accessed from this age (rising to 57 in the future), yet some final salary schemes may not be available until later. Your State Pension, moreover, will not provide an income until you reach State Pension age – i.e. your late 60s. Earlier in your retirement from 55, therefore, it will be wise to consider other tax-efficient investment “vehicles” to provide an income until you can start accessing your pension(s). Here, a stocks & shares ISA can be a good option, since the capital can be accessed at any time.

Also, the less you need to spend in retirement, the less you need to save. For instance, having no mortgage from age 55 would take away a large monthly expense (although this goal may not be a priority or achievable for everyone). 

Finally, consider seeking financial advice if you want to retire from age 55. A financial planner can help you think through issues or opportunities you may not have considered. Bear in mind that the earlier you want to retire, the harder it is to project your cash flow, so you may benefit from the software and expertise our experts can offer.

 

Invitation

Interested in finding out how we can optimise your financial plan and investment strategy? Get in touch today to arrange a free, no-commitment consultation with a member of our team here at WMM. 

You can call us on 01869 331469 

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxfordshire).

 

May 16
0

Could switching these 5 financial products help grow your savings?

By | Money Tips

It is no secret that costs are rising in 2022. Inflation, at the time of writing, now stands at 6.2%, the highest CPI 12-month inflation rate since 1997, and is very much expected to rise further. Households are understandably seeking greater financial stability. Yet many people do not consider switching key financial products or utility costs, which could help save money. Below, our financial planning team at WMM shares 5 of these to consider in 2022. We hope you find these suggestions helpful.

 

#1 Broadband

Those who want an ultrafast broadband, phone and TV bundle are likely to pay an average of £79.40 per month in 2022. The average UK spending is £56.99. 

Of course, in today’s world of increasing home working, a fast internet connection is important. Yet many people are paying too much, or for more than they need. You may be able to find deals close to £15-20 per month.

 

#2 Mobile phone

According to Which?, 40% of customers have stuck with their mobile phone provider for more than 5 years. This has left many people paying more than they should. 

The average UK mobile phone bill is £439 per year (about £36 per month). Yet you could bring this down to nearly £10 with a SIM-only deal, after you have paid off your handset. This means staying with your device rather than upgrading, however.

 

#3 Mortgage provider

For most homeowners, their mortgage will be their highest monthly expense. With interest rates steadily rising in 2022 to help curb inflation, this is driving up the cost of many mortgages on a variable rate. Getting a fixed deal (e.g. 2-5 years) could help provide some stability.

It may also be possible to save by remortgaging with another lender, which offers a better rate. Those coming to the end of their current fixed deal, therefore, should consider shopping around. This could save you £100s each month.

Of course, remortgaging is a big, personal decision and it may not be right for you (e.g. if you are in negative equity). Bear in mind that you can remortgage at any time, but there may be a charge involved if you end your current fixed-deal early.

A financial planner can help you explore the options and come to an informed decision about the right deal, and timing, for remortgaging.

 

#4 Credit cards

Ideally, households should aim for no credit card debt at all. Interest rates are high in 2022 – standing at an average 21.46% APR. 

However, if you have ended up with debt, you may be able to move it to a credit card with a lower rate – e.g. 9.9%. There are even deals offering 0% interest for a limited time (e.g. 36 months), which can make it easier to repay the debt if you are disciplined.

 

#5 Bank accounts

Many people are unhappy with their bank, yet 50% of Britons have never switched providers for their current account. However, doing so could open up opportunities for better overdrafts, more competitive interest rates and higher quality service.

In fact, some banks even offer new customers a “golden handshake” (financial reward) for moving over to them. Switching may seem like a hassle, but it is usually quite easy under the Current Account Switch guarantee.

 

Invitation

Interested in finding out how we can optimise your financial plan and investment strategy? Get in touch today to arrange a free, no-commitment consultation with a member of our team here at WMM. 

You can call us on 01869 331469 

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxfordshire).

 

May 13
0

3 ways to keep staff during “the Great Resignation”

By | Financial Planning

A third of UK workers are considering a career change in 2022, with the sectors most likely to be affected including Legal, IT & Telecoms and Sales, Media & Marketing. Indeed, many analysts have called 2022 a “job seekers market”, with many sectors offering more vacancies than they seem able to fill. The age groups most affected appear to be 18-24 and those age 65+. Many of the former moved back in with parents since the 2020 pandemic, whilst many of the latter took early retirement (with too many unprepared, financially). 

The reasons cited by workers for leaving employment include a lack of pay rises or bonuses, limited flexibility (e.g. home working options) and feeling disrespected. In 2022, therefore, how can business owners ensure they keep their best staff? What kinds of qualities can employees look for in a good employer? Below, we suggest 3 benefits to keep in mind..

 

Put in a solid employee package

It might sound obvious, but offering a fair salary and decent employee benefits will be strong positive drivers in helping to retain staff. Unfortunately, many business owners do not keep an eye on market rates in their area/industry – leaving them vulnerable to poaching. Be careful not to assume that employees just care about pay, however. You can make a contract much more compelling with tax-efficient ideas such as the following:

  • Matching employee pension contributions (rather than just offering 3%).
  • Offering “death in service” benefits, as a type of life cover.
  • Providing long-term sick pay.
  • Making “salary sacrifice” schemes such as the ‘Cycle to Work scheme’ available.

 

Foster a healthy work environment

Few things are as likely to alienate employees as a toxic workplace. Perhaps discrimination is tolerated to some degree, making people feel unvalued and unwelcome. Maybe there is just a general atmosphere of unfriendliness, gossip or lack of trust between team members. Managers can also be overbearing, or disinterested.

Owners and directors play a key role in setting the tone and culture of the work environment. Part of this means prioritising staff training and team building exercises (e.g. fun days out). It also involves regular check-ins with employees to see how they are doing, encouraging team communication and opportunities to share fears/grievances. 

Finally, showing appreciation – with your words and even with gifts – can go a long way to help people feel appreciated and that their work is recognised.

 

Identify progression opportunities

Not everyone in a job wants to progress up the career ladder. Perhaps they are quite happy in their role, where they are. However, many people do want the opportunity to earn better pay and take on new, interesting responsibilities. If their job feels like a “dead end”, however, then they may start to look outside your organisation to meet these needs.

Small business owners may find this a particular challenge since, by nature, there are fewer job opportunities in the company compared to a larger one. However, if the business is growing and adding more people to the team, then you can paint a vision of where the company could be in, say, 5 years’ time – and the role that your employee could progress into, if they work hard.

Vision and momentum are really important. If people in your team feel like the organisation is not really “going anywhere”, then they might see limited future opportunities to develop their skills and earning potential. You can help address this by providing regular “strategy” meetings throughout the year about where you want the business to go. From there, make sure you follow through and deliver. If not, your team will likely start to see your “strategies” as not grounded in reality or real promises.

 

Invitation

Interested in finding out how we can optimise your financial plan and investment strategy? Get in touch today to arrange a free, no-commitment consultation with a member of our team here at WMM. 

You can call us on 01869 331469 

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxfordshire).

 

May 06
0

Watch out, scammers about!

By | Money Tips

Scams have always existed, however through the increased use of social media and online accounts scams have become far more common and, often times, harder to spot. 

We’re happy to report that none of our clients have been affected by any of the scams mentioned, however it’s important to remain vigilant. 

In this article, we offer some advice on how to spot a scam and ways to check if it is a genuine offer.

 

How do the scammers get my information?

Data is widely available for sale, with databases often sold on from all kinds of establishments from phone companies to insurance providers to holiday agents. These databases are available to pretty much anyone who is willing to pay for them. Ticking the “no contact” and “no third parties” options on any forms you complete is a good way of limiting the number of databases you appear on. Also, depending on the scale of the scam, experts are employed to hack into databases and steal the data. And sometimes, it’s just pot luck.

 

How to spot a scam and avoid it

  • You’re likely aware of the scam phone call where someone claims to be from your bank. If you don’t have an account with the quoted bank, then it’s more obvious to spot that it’s likely to be a scam. But eventually they will come across someone who does have that account, and may believe it’s a genuine call from their bank. Here, we would recommend ending the conversation, and ringing your bank directly on the usual customer contact number. Don’t use the number supplied by the caller. If it is a genuine call from your bank, the caller will not mind you ending the conversation. 
  • We have personally received similar calls from someone pertaining to be from our broadband supplier, stating there has been unusual activity reported via our router. They then direct you to a website, often a legitimate screen-sharing or file transfer site, the end result being that your activity and passwords can be recorded. The interesting thing about this particular attempt, is that broadband providers rarely, if ever, make such calls. Again, our advice here would be to end the call and ring your provider directly on the usual customer advice number if you are in any doubt.
  • Many scams are now sent via email invitations to click a link, which in turn downloads spyware to your computer, which records regular activity and passwords. These can often be harder to spot, as they mask email addresses to look very close to genuine. Here, especially if the email is unexpected, we would recommend closing the email, and logging in directly to your relevant account, without using any links in the email. If the email looks like it’s from a friend, but is only a photo or a link without your usual conversation, try calling them or email them directly in a new email to check. 

We’ve recently been made aware whereby a client of another financial advice company fell foul of an email scam. The client was contacted by email about a new high interest deposit account, suggesting it may be of interest. Of course, in these times, high interest would be very appealing. The ‘senders’ email address had been masked to look very similar to the genuine email address of the client’s actual adviser. This only became clear it was a scam some months later, when the client made a passing comment to their adviser about receiving no paperwork yet. The adviser confirmed not having made such a recommendation or issuing any emails about the account in question. Unfortunately, by this time the client had already ‘deposited’ several large sums into the account, none of which were protected against this type of fraud.

These scams can be harder to spot. We will never contact you about a new investment or account by email, without a prior meeting or phone call with your financial planner. If you’re ever in doubt, or don’t recognise the name of the person calling, then hang up and call us directly on the office number.

 

In summary, we would always recommend:

  • End any unsolicited calls straight away and phone your bank or provider back on their usual customer service number, not a number supplied by the caller.
  • Don’t click on any links or files in emails that you’re not absolutely sure of. Log in to your bank or provider portal directly, using your usual app or web address. Do not use the link in the email.
  • We will never contact you by email to suggest an investment into a new company or account. If you’re ever in doubt, or don’t recognise the name of the person calling, then hang up and call us directly on the office number.

 

You can call us on 01869 331469 if you have any concerns.

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxfordshire).