News

 

 

Retirement on your terms is likely to be one of the key elements of your financial plan.

So, as you approach or reach retirement, now is the time for you to start thinking about enjoying a comfortable life when you stop working.

Many people see retirement as the start of their “second life” – the time when you have the chance to do all the things you want to do. You may have been planning this moment for many decades and have grand plans for what you might like to do in the years ahead.

If you haven’t already done so, now is also the time to start thinking about your income in retirement, and how long it may need to last.

Aside from taking all your fund in one go – or not taking it at all and leaving it to pass to your heirs – there are four main options:

• Buy an income for a fixed period or for life, known as an “annuity”.
• Take an adjustable income, known as “flexi-access drawdown” (or sometimes just “drawdown”).
• Take lump sums from your pension fund, sometimes known as “uncrystallised funds pension lump sums” (UFPLS).
• Mix and match different options.

This useful guide explains the advantages and disadvantages of each option, as well as some other areas you might want to consider when planning for retirement.

Download your copy of ‘Your retirement choices: How to generate an income in later life’ to find out more now.

If you’d like to talk about your retirement plan, please contact us to arrange a meeting.

Millions of students across the UK are preparing to head to university and pursue their educational goals. As a parent, you may feel proud as you help them pack up their belongings and move into their own space for the first time. Yet, you might also be worried about how they’ll cope financially or repay the student loans they’re taking out.

Figures from the House of Commons Library show there were 2.86 million students in the UK in 2021/22. Around 550,000 applications were accepted for full-time undergraduate places through UCAS in 2023.

If your child was among them, read on to find out what you need to know about supporting them through university.

The average student will graduate with debt of £43,700

While going to university could broaden career prospects, you might worry about the financial implications of borrowing money to pursue further education.

Many students will take out loans to cover tuition fees, which are a maximum of £9,250 a year in England in 2024/25. With the average course lasting three years, that means graduating with debt of £27,750.

In addition, students may take out a maintenance loan to help with living costs while they study. Rent alone can add up to a substantial amount. Indeed, according to the BBC, in 2023/24, the average student outside of London and Edinburgh paid £7,475 in rent for the academic year.

How much your child can borrow through a maintenance loan will depend on a range of factors, including where they’ll be studying, if they’ll be moving out, and your household income.

Official figures show that the average student going to university in 2024 is expected to graduate with debt of £43,700. The government expects around 65% of these students to repay their student loans in full during their lifetime.

With such a large figure, you may be tempted to offer an alternative to student loans. However, they work differently from traditional loans, so using your money to replace a student loan might not be the best way to support your child.

“Plan 5” students will make student loan repayments once they earn £25,000 a year

The way student loans work often means they can be viewed like a graduate tax rather than a traditional loan.

Students starting university in 2024 will take out “Plan 5” loans, which launched in 2023.

Under a Plan 5 loan, your child won’t need to make repayments until they’re earning £25,000 a year. If after graduating, they’re unemployed or are a low earner, they wouldn’t need to make any student loan repayments. The repayment threshold is frozen until 2027, after this point it’s expected to increase with inflation.

Once your child earns more than £25,000, 9% of their earnings above the threshold will be used to repay their student loan. So, a graduate earning £35,000 would make student loan repayments of £900 a year. If your child hasn’t repaid the loan within 40 years, it is automatically wiped.

For employees, repayments are automatically removed via payroll, just like Income Tax and National Insurance deductions.

Interest is added to the loan at the rate of inflation, as measured by the Retail Prices Index (RPI).

So, while you might be worried about how your child will repay their student loan, it’s manageable for most graduates.

The average student maintenance loan falls short by £582 a month

The rising cost of living has placed pressure on students’ day-to-day finances. As a parent, lending financial support to cover living expenses might prove more useful than covering tuition fees.

According to Save the Student, in 2023, the average student faced a financial shortfall of £582 a month as the maintenance loan they were entitled to didn’t cover their living costs. Indeed, monthly expenses increased by 17% to £1,078 in 2023 when compared to a year earlier.

It means some students had to make difficult choices about where to cut back. The survey found that a fifth of students often skip meals to save money.

With 4 in 5 students worried about how they’ll make ends meet, regular financial support from parents throughout their education could make a huge difference. More than half of students said financial concerns harmed their mental health and 30% stated their grades suffered as a result.

So, if you’re in a position to, you might want to consider how you could help your child manage their budget and ease some of the financial stress they may experience as a student.

Contact us to make supporting your child part of your financial plan

If your child will be going to university soon and you want to update your financial plan to offer them support while they study, please contact us. We’ll work with you to adjust your plan to reflect your short- and long-term priorities.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A new study has disputed the saying “money can’t buy happiness”. In fact, the research suggests the opposite is true, money can buy happiness, but it isn’t as simple as accumulating as much wealth as possible.

According to the Guardian, a study from the University of Pennsylvania found a strong association between money and happiness. The researchers tracked the happiness of more than 33,000 adults in the US with a household income of at least $10,000 (£7,677) a year, including those with a net worth of more than $3 million (£2.3 million).

If you believe the old saying, you might expect happiness to be fairly consistent across all participants, regardless of their wealth. Yet, the data showed there was a happiness gap between wealthy and middle-income participants, which was wider than middle- and low-income households.

Researcher Matt Killingsworth said that wealthy individuals were “substantially and significantly happier”. Yet, he added that this happiness is “psychologically deeper than simply buying more stuff”.

For many of those reporting higher levels of happiness, financial freedom played a role in their life satisfaction.

The feeling of control can explain 75% of the association between money and happiness

There are wellbeing benefits to accumulating more wealth. You might feel a greater sense of security knowing that you have assets to fall back on if you face an unexpected shock. Or you may experience a sense of accomplishment when you see the value of your savings rise.

Yet, the study suggested that it’s the ability to live life on your terms that contributes to happiness, rather than simply having more money to spend.

Speaking to the Guardian, Killingsworth said: “A greater feeling of control over life can explain about 75% of the association between money and happiness. So, I think a big part of what’s happening is that, when people have more money, they have more control over their lives. More freedom to live the life they want.”

Killingsworth added: “Money alone – which we’re already pretty motivated to pursue – is just one small part of the overall equation for happiness.”

So, while you might consider how to grow your wealth, thinking about your purpose and how to use assets to live the life you want is just as important.

That might seem like a simple task, but it’s something many people overlook.

Indeed, a report from Aegon suggests just 1 in 5 people are very aware of the day-to-day experiences that give them joy and purpose in life. In addition, only a quarter of people have a concrete vision of the things and experiences their future self might want.

This lack of understanding of what offers your life purpose could mean you’re missing out on opportunities to use your wealth in a way that may support your long-term happiness.

As a result, considering your priorities could provide a good starting point for creating a financial plan that focuses on your happiness. What would you do if money were no object?

Perhaps you’d like to retire and travel the world, or maybe spending more time with your family would be your priority.

A financial plan could help you create a realistic blueprint for your goals

A tailored financial plan will consider your life goals, and, crucially, it could help you to understand what’s realistic and the steps you may take to achieve them.

You might be daydreaming of retiring early, but are you taking the steps necessary to ensure you are financially secure? Or could you achieve a better work-life balance that brings you happiness now by cutting back your working hours?

By bringing together your aspirations and financial circumstances, a financial plan could demonstrate how you might use your wealth to create the life you want now and in the future.

Contact us to talk about taking control of your finances

Feeling in control of your finances and your future could boost your happiness and provide you with a greater sense of wellbeing. A financial plan could play a role in helping you set out the life you want to lead and how to achieve it.

Please contact us to arrange a meeting to talk about your financial plan and what makes you happy.

Please note:

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

If you were trying to improve your health and wellbeing, what would you think about changing?

Your first instinct may be to eat healthier foods or exercise more frequently. However, new research suggests that your social life might play a more important role in your overall health than you may think.

Read on to discover how loneliness could impact your health, and what you can do to combat it.

What is loneliness?

The Campaign to End Loneliness (CEL) defines loneliness as “a subjective, unwelcome feeling of lack or loss of companionship. It happens when there is a mismatch between the quantity and quality of the social relationships that we have, and those that we want.”

It’s important to understand that social isolation and loneliness are not the same thing. It’s common for people to feel lonely even when they are surrounded by friends or loved ones.

If you’re unsure whether loneliness affects you, you can take an online test to see how you rank on the UCLA loneliness scale.

How can loneliness affect your health?

The World Health Organization (WHO) considers loneliness as one of the most significant global health concerns, as it can affect every aspect of your wellbeing.

People who suffer from chronic loneliness have a higher risk of developing certain mental health problems, such as anxiety and depression as well as dementia.

However, many people don’t know that loneliness can also have a huge impact on your physical health.

A recent study by Harvard University found that adults aged 50 and above who experienced chronic loneliness had a 56% higher risk of stroke than those who consistently reported not being lonely.

Additionally, scientists have linked chronic loneliness with an increased risk of:

• Type 2 diabetes
• High blood pressure
• Cardiovascular disease
• Susceptibility to viruses and respiratory illnesses

In fact, the US surgeon general warned that the mortality effects of loneliness are equivalent to smoking 15 cigarettes a day.

How can you combat loneliness?

Understandably, no one wants to feel lonely or suffer from a long list of negative side effects. However, learning to connect with new people and overcome anxiety surrounding social interactions can be very difficult for some people.

If you want to beat feelings of loneliness, try some of these methods to build stronger connections with the people around you.

1. Learn how to be comfortable with your own company

Self-esteem issues can often be a root cause of feelings of loneliness, so improving your relationship with yourself can help you to then connect with others.

You can learn to boost your self-esteem and become more comfortable with your own company by taking part in solo activities, such as:

• Going for a walk
• Practising self-care
• Starting a new hobby
• Visiting a café or restaurant.

Enjoying fun things by yourself – especially ones that require social interactions – can help you boost your self-esteem and confidence so you can get out there and start talking to new people.

2. Open up to your loved ones

Loneliness can also be caused by a lack of deep connections with the people you know, or the feeling that those around you aren’t giving you the care or attention you need.

If this is how you feel, it’s important to tell someone you trust, whether that be a family member, friend, or even a coworker.

Although speaking about your feelings can feel intimidating, it’s important to remember that almost everyone experiences loneliness at some point during their lives. Indeed, a recent study found that one in three Britons regularly feel lonely.

Speaking to people you care about and understanding that you are not alone in your feelings can help you connect with your loved ones.

3. Try not to compare yourself with others

As technology has developed over recent years, many of us have changed the way we communicate.

Being able to interact with people online can be a positive thing, as it allows you to speak to loved ones wherever they are and connect with people with similar interests.

However, it’s important to remember that what we see on social media is often carefully curated to make other people’s lives look better than they are.

Constantly seeing photos or videos of your friends and family socialising with others can make you feel like you’re the only person who feels lonely when that is simply not true.

Reminding yourself that social media does not reflect real life and remembering to occasionally disconnect so you can meet up with people in person can help you combat feelings of loneliness.

4. Connect with your community

However, technology can also be a fantastic way to help you build up the courage to speak to new people.

If you’ve felt lonely for a long time, the idea of talking to strangers may seem overwhelming. Starting slow and building yourself up to making new friends can help you to make deep connections with the people around you.

An easy way to start interacting with people is to consider your hobbies and join online communities dedicated to the same interests. Once you are more comfortable speaking to people about your favourite topics, you can look for local groups focused on the same things.

Another method to fight loneliness is to start having short conversations with people you come across in your day-to-day life. This could include your neighbours, people in public spaces, or even the cashier at your local shop.

5. Speak to a therapist

Talking to a therapist could help you explore the cause of your loneliness and come up with personalised plans to build connections with the people around you.

Therapists can help you to develop strategies for dealing with situations you find difficult – for example, helping you overcome anxiety around social interactions – so you can understand how your beliefs and attitudes affect your feelings and behaviour.

There’s an abundance of unregulated financial advice available, and research suggests it could harm your security and long-term plans. Whether you receive advice through social media or follow the financial decisions of friends, you could take more risk than is appropriate or miss out on opportunities.

Read on to discover some of the potential perils of taking unregulated financial advice.

Almost 14% of Brits use social media for financial guidance

Social media has become an important part of daily life for many. Indeed, it’s estimated that in 2022, 4.59 billion people used social media worldwide. So, it’s perhaps unsurprising that a growing number of people are seeking financial advice on social media platforms.

According to a study from Capital One, 13.7% of Brits use social media as a primary resource for financial guidance. Interestingly, men were twice as likely to use social media platforms when seeking financial advice.

While social media can be informative and may contain advice from experts, the research suggests it may be more likely to harm your wealth.

In fact, almost three-quarters (74%) of people who have taken financial guidance from social media lost money or experienced an “undesired outcome”, such as harming their credit score.

Social media isn’t the only place you’ll come across unregulated financial advice either. You might also speak to friends and family, hear advice in the media, or read blogs that offer guidance. So, it can be difficult to avoid unregulated advice, but recognising when it could harm your finances may be important.

4 reasons you may choose to avoid unregulated financial advice

1. You might not know whether they’re qualified or experienced

The Capital One research found that 30% of survey participants said qualifications were a sign of trustworthiness.

The Financial Conduct Authority (FCA) requires all regulated financial advisers to have the relevant qualifications. This means you can rest assured that your finances are in safe hands.

If you choose to take advice from social media or other unregulated sources, it can be difficult to assess the qualifications and experience that the person has. Indeed, the Capital One research found that 80% of financial content on YouTube was made by someone with no qualifications.

2. You’re not protected if something goes wrong

Taking regulated financial advice means you could be protected by the FCA if something goes wrong. All regulated financial advisers will have internal complaints handling procedures and, if you need to, you can approach the regulator.

In contrast, if you’ve taken unregulated financial advice, it might be difficult to hold the individual or firm accountable or get justice if you encounter a problem. For example, you might not receive compensation if you were given inappropriate advice or mis-sold an investment.

3. The advice may not be tailored to you

Watching a quick social media video might seem like a simple way to receive financial advice, but it’s important to note it hasn’t been tailored to you. As needs and goals can vary hugely between people, a one-size-fits-all approach could lead to some acting on advice that isn’t right for them.

Similarly, a well-meaning family member might offer investment advice that suits their needs, but that doesn’t mean it’s the right solution for you. A host of factors might affect your investment decisions, from your investment time frame to the other assets you hold.

Despite this, almost 20% of people told Capital One that their friends and family are their primary source of financial information.

Working with a regulated financial adviser means you have an opportunity to talk about your aspirations, concerns and wider finances to create a plan that’s tailored to you.

4. You could increase the risk of falling victim to a scam

It can be difficult to check the credentials of online personas. So, if you’re taking advice from online sources, you could be more likely to be targeted by a scammer.

The Annual Fraud Report 2024 from UK Finance also notes that scammers are increasingly using social media to connect with victims and gather information. For example, the report states that adverts on social media are “used heavily in investment scams”.

When seeking financial advice, you can use the FCA’s Financial Services Register to find the details of legitimate, regulated firms.

Contact us to talk about your finances

As regulated financial advisers, you can have confidence in the guidance we provide. If you’d like to talk about your financial plan, please get in touch.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Balancing your long-term goals with enjoying your life now can be a difficult balancing act. Regular financial reviews could ensure you get more out of your life at every stage by helping you to strike a balance that suits your needs.

It’s a common misconception that financial planning is simply about accumulating wealth. While managing your assets is a key part of effective financial planning, it’s about more than that. A financial plan could give you the confidence to enjoy life now while securing your future.

A financial plan could be valuable and help you reach your goals, but to get the most out of it, ongoing reviews may be just as important.

Your goals and priorities may change over time

What were your goals and priorities 20 years ago? While some may have remained constant throughout your life, others could have changed significantly.

Perhaps in your 30s, you were focused on progressing in your career and building wealth. However, once you start a family, your priorities may shift to improving your work-life balance so you can spend more time with your children.

Similarly, you might initially decide you want to retire when you’re 70, but later find you’d like to give up work sooner so you can travel or spend more time on hobbies you’re passionate about.

Your aspirations are an essential part of creating a financial plan. They will guide the decisions you make so they reflect what you want to get out of life.

So, regular reviews that provide an opportunity to talk about what’s important to you could help you enjoy life now and consider what you’d like to achieve in the future.

A review could ensure your financial plan continues to reflect your circumstances

It’s not just your goals that will change throughout your life. Your financial circumstances are likely to vary through different life stages too.

When you first create a financial plan, you might be building your career and as you progress, your salary could change significantly. Updating your plan could help you assess how to use your income to enjoy life – should you increase your disposable income now or put more away for retirement?

There isn’t a one-size-fits-all answer, so reviewing your financial plan could help you assess how to use your wealth in a way that continues to reflect your goals.

There are other reasons your financial circumstances may change too. Perhaps you receive an inheritance, start financially supporting elderly family members, or decide to reduce your working hours.

Cashflow modelling is a tool you can use as part of your financial plan to help you visualise your wealth. It could show you how your assets will change over time.

Cashflow modelling may be useful when you want to understand the effect your decisions will have. For example, you might model how increasing pension contributions could alter your retirement income, or how gifting assets to your children might affect your financial security later in life.

The results of a cashflow model are based on assumptions, such as expected investment returns or inflation, so they cannot be guaranteed. However, regularly updating the information you input into a cashflow model, from your income to the value of assets, could improve the outcomes.

Regular reviews could put your concerns about the future at ease

Worrying about the future is a common reason for being unable to enjoy the present or even look forward to long-term plans. Knowing that you’re being proactive in securing the future you want could ease some of these concerns.

A financial plan could address fears like whether you’re saving enough to retire. Reviews could also put your mind at ease about factors that are outside of your control.

For example, you might worry about what would happen if you need care later in life, which could affect life satisfaction today. According to a report in FTAdviser, 59% of people worry about developing Alzheimer’s because of the pressure it would place on their family, and 41% are concerned about the cost of care.

If this is something you’re worried about, your financial reviews could provide a time to talk about your concerns and adjust your plan to put your mind at ease. For instance, you might decide to put money aside to act as a care fund or name a Lasting Power of Attorney so someone you trust could handle your affairs on your behalf.

We’re here to help you create and review your financial plan

As your financial planner, we’re here to work with you to create and then regularly review your financial plan to help ensure it continues to support your short- and long-term goals. Please contact us if you’d like to arrange a meeting.

Please note:

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate cashflow planning.