Blog

People like you: 30-49

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You’re not on your own if it feels like planning and saving for the future is a bit of a challenge! There are people just like you out there and we’re sharing their stories so you can benefit from their experiences.

Meet 41 year old Marcus…

We’re sorry to hear you’ve separated from your wife…how have you been?

After the divorce from Tracey my life was a bit of a mess. I’ve had to review all my finances again, including my pension, as I had to agree to a pension sharing order. To be honest I have many worries about the future and I need to concentrate on starting over and buying a flat in the next five years or so.

I can add an extra lump sum into my pension through the bonus sacrifice arrangement and I won’t lose any of this money to the taxman.

How has starting over affected saving into your pension?

Inevitably my priorities have changed and I’ve looked at my pension details and discovered my company match whatever I pay in up to 10% – this feels like ‘a gift’ that I’m going to take advantage of. I only need to cut back a little each month on other spending in order to maximise what is on offer, and this will help to build up more savings in my pension.

Did you know that you can pay your bonus into your pension too?

Yes, I know will get a bonus in a few months as my employer is doing well, and they’ve been very good at letting us know about the benefits of bonus sacrifice. I can add an extra lump sum into my pension through the bonus sacrifice arrangement and I won’t lose any of this money to the taxman – it seems like a good idea! If I can do this every year, I won’t be overcommitting myself each month but can still keep my pension topped up.

To find out more about pension sharing, visit: www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change/when-relationships-end/pension-sharing.

People like you: 18-29

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Do you sometimes feel like getting your head around financial planning and saving for the future is a bit of a challenge? Well, you’re not on your own! There are people just like you out there and we’re sharing their stories so you can benefit from their experiences.

Meet 23 year old Polly…

What do you do for work Polly?

I work in fashion retail. Going forward I hope to join the management training scheme to improve my career prospects within the Group.

What has been your experience so far with money and finances?

Growing up, money was tight, but my parents always worked and paid into pension schemes, so I understood from an early age the need to have money for the future.

I want to save up for my own flat, but don’t want to waste money on renting, so plan to stay home for the time being. I’ve heard about the Government introducing the LISA (Lifetime ISA) next year, so I am going to look into this as it could help me save for a deposit.

Did you know that a Lifetime ISA or LISA can also help you with your retirement saving as well?

Yes, I have but I would rather use the money being a first-time buyer. It also means I can keep this account open for when I eventually come to save for retirement.

Do you know anything about retirement?

I know that there is a pension awareness day soon at our Head Office where you can drop in and find out about auto-enrolment and the benefits of saving in a pension scheme – so I am planning to go.

For further information about the LISA visit: www.gov.uk/lifetime-isa.

Saving money on your childcare

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If you are a parent, did you know that you could save over £1,000 a year on childcare for your little ones aged up to 15 (or 16 if disabled)?¹

That is because the cost is taken you out of your gross pay meaning you save money, as you do not pay any tax or National Insurance on it.

In order to get the vouchers, you just need to ask your employer and join their childcare voucher scheme.  You can use the vouchers to pay for childcare including, nurseries, childminders, holiday and after-school clubs.

There is a time limit though to join as these schemes are going to close to new members in the next six months. The vouchers are being replaced by a new system called ‘Tax-free Childcare’, which will give eligible parents an extra 20% towards childcare costs, up to a maximum of £2,000 per child, per year.

In the meantime, it’s worth knowing the difference between the two:

Tax-free childcare

 Childcare vouchers
Anyone can apply Only available if your company offers them
£120 per week minimum (if in a couple, both parents must work) One parent needs to work (no minimum earnings)
Child’s maximum age 11 (16 if disabled) Child’s maximum age -15 (16 if disabled)
Maximum income limit – less than £100,000 per parent No income limit
Buy up to £243 per month Tax and NI free (based on tax band)

To help you make a decision about your options, visit www.gov.uk/childcare-vouchers-better-off-calculator for more information.

¹ www.moneyadviceservice.org.uk/en/articles/help-with-childcare-costs – based on basic rate tax payer with £243 of vouchers each month

Part three: planning to make your dream retirement a reality?

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Have you really thought about what retirement looks like for you? Which aspects of your daily life do you currently take for granted that might have a significant impact on your wellbeing? And importantly, what plans do you need to put in place to make your dream retirement a reality . . ?

It’s worth remembering that you will still be the same you when you retire but with the added benefit of not having to go into work every day! You might be looking forward to the day when you hang up your work hat for good, but don’t under-estimate the positive effect that the old routine has had on you over the course of your working life.

Keeping in touch

You might be shocked to find that you miss aspects of your work routine! The security and familiarity of long-seated routines can be highly influential on mood and mental wellbeing. It’s worth considering how you are going to keep the variety of contact and experiences in your daily life to make sure you enjoy all the free time you suddenly have! Head over to Age UK for a wealth of information on hobbies, travel and activities local to you.

 

Missing your former colleagues? Some of our longest lasting friendships can be forged at work, so don’t be surprised if you feel lonely without daily contact with your work friends. Make time to keep in touch with your friends – you’ll benefit from a huge lift in mood even just going for a coffee and a chat.

 

Does retirement mean being at home with your partner all day, or on your own? People often describe having to get to know their partners all over again when they retire as they’ve never spent so much time together! It can be a challenging time for many in relationships, but incredibly isolating for those who suddenly find themselves at home on their own too. There is help out there for those who experience loneliness and isolation – take a look at the amazing community that Contact the Elderly has built around having a cuppa and a slice of cake!

Whatever retirement looks like for you personally, you can never save or plan for it too early. 4me has a wealth of interactive tools, short videos and a comprehensive library to help you with planning for the future. Find out more about how 4me can help you here.

Part two: planning to make your dream retirement a reality?

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For some, retirement might feel like the end of an era – a time to slow down and settle for a quieter way of life but with many of us living longer, healthier lives maintaining that full and busy lifestyle when we eventually stop working is fast becoming the norm.

It’s worth remembering that you will still be the same you when you retire but with the added benefit of not having to go into work every day!

Staying fit, healthy and active

While you’re working you might take for granted the ways in which you keep your mind and body active, but it’s important to really think about how to continue looking after yourself in retirement.

Does it take you fifteen minutes to walk to and from your workplace Monday to Friday? You probably don’t even think about it as ‘exercise’ but this daily walk helps to raise your heartrate and keep you physically mobile. NHS guidelines recommend that an adult over 65 who is generally fit and healthy should look to exercise for at least 150 minutes every week. This could equate to two thirty minute runs and 30 minutes of brisk walking, so consider how you could work those minutes into your weekly routine.

Is your current job physically demanding? You may be used to heavy lifting, walking or being on your feet all day and all of this activity benefits both your physical and mental wellbeing. Though you might be welcoming the chance to slow down a bit, you should try to make sure you have alternative plans in place to keep you fit and healthy. Age UK has some great tips on how to keep active and where to find exercise classes local to you.

Do you have a subsidised gym membership as part of your benefits and rewards package? Remember that your gym membership might cost you more when you retire so you may want to find an alternative or factor in the added cost.

Whatever retirement looks like for you personally, you can never save or plan for it too early. 4me has a wealth of interactive tools, short videos and a comprehensive library to help you with planning for the future. Find out more about how 4me can help you here.

Ten ways to save money during wedding season

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There comes a time in your life where people all around you are getting married and starting a family.

If you’re like me, and have three weddings and hen parties all very close to each other in the same year, you may start to panic about how you are going to afford it all!

Take a look at our top tips, and don’t say ‘yes’ to the stress of being a wedding guest . . .

  1. Book accommodation early – try and get a group deal or look for alternative options such as Airbnb. It can work out a lot cheaper than getting a hotel room. You’ll also beat others to it who leave it to the last minute.
  2. How are you getting there? – depending on the location of the wedding, it’s worth checking how you will get there. If you book trains early enough, you can usually get a good deal or you can car share and split the cost of petrol which can work out a lot cheaper than sets of train tickets.
  3. Buy the wedding gift early – if there is a gift list, take a look early and see if you can snap up something in your budget.
  4. Split the cost of a gift with friends – thinking of something more extravagant? Then club together with your friends.
  5. Can’t afford a gift? – offer to help with something on the day or make a gift yourself? Pinterest has some great ideas for crafty people.
  6. Upcycle an outfit – if you can’t get a new dress/suit for the big day, buy a new accessory or shoes to make you feel special instead.
  7. Borrow an outfit – it sounds simple but take a look in your friends’ wardrobes and you might be surprised! Just make sure you return the clothes nice and clean!
  8. Rent an outfit – easy peasy – you can pay to rent your dress or suit and then you can give it back after the wedding is over. Ladies can go to girlmeetsdress and the boys can go to mossbroshire. Job done!
  9. Set yourself a budget – if you can afford to attend all of the weddings, then great! But decide on a budget beforehand so you don’t overspend.
  10. Don’t be afraid to say no – if you are invited to several weddings but can’t afford to go to them all, then be realistic.

Part one: planning to make your dream retirement a reality?

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It’s often difficult to imagine what the future will look like – especially when you’re young! It’s even more challenging to plan effectively for a future you can’t imagine while the immediate issues and responsibilities you face on a daily basis take up most of your time.

For some, retirement might feel like the end of an era – a time to slow down and settle for a quieter way of life but with many of us living longer, healthier lives maintaining that full and busy lifestyle when we eventually stop working is fast becoming the norm. It’s worth remembering that you will still be the same you when you retire but with the added benefit of not having to go into work every day!

So let’s think for a moment about what you really want your retirement to look like, and some of the aspects of your daily life that you may currently take for granted. What plans do you need to put in place to make your dream retirement a reality . . ?

Maintaining your current lifestyle

Do you have an active social life, enjoy dining out, weekending with friends, have hobbies and organisations that you belong to? These are the things that make you, you and likely bring you a great deal of pleasure! Having more time to spend on them once you retire is truly something to look forward to, but it’s worth remembering that you will need to factor the associated costs in when you’re working out your later life budget.

Take a look at the cost of living example below. It will give you a good idea of just how much prices have risen for some essential living costs over the decades:

         

1978

 £14,054 17p £3.60

£2,760

1998

 £73,261 71p £10.03

£12,500

2008

 £211,119 £1.04 £1.04

£15,800

2018

 £255,325 £1.19 £13.60

£21,164

Prices taken from the ‘Back in the day’ website which uses data from ONS, the AA, Nationwide Building Society and the National Archive.

Whatever retirement looks like for you personally, you can never save or plan for it too early. 4me has a wealth of interactive tools, short videos and a comprehensive library to help you with planning for the future. Find out more about how 4me can help you here.

Take the guesswork out of your pension puzzle

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Do you have a clue what you’re likely to live on when you finally decide to call time on your working life? Have you got all the pieces in place now to help pay for your future? We take a look at four ways to help take the guesswork out of the pension puzzle.

Sorting out the pieces

It’s never too early to start budgeting so that you have a clear picture of the income you’ll need, and work towards achieving it.

You are likely to have a pension associated with each job you’ve had during your working life. It can be tricky to keep up to date with all of these separate ‘pension pots’ (especially if you left the job/s many years ago) but bringing all the pieces together so you have a more complete picture, can really help with planning effectively for your later life. Why not request up to date statements from all your pension providers so that you have a realistic idea of how much you can expect when you retire? You can also track down any ‘lost’ pensions with the Pension Tracing Service.

Make sure the corners and edges are in place before filling in the middle

When you are working out how much income you will need in retirement, consider your current outgoings, and decide which you think might go up, down or stop when you retire. You may have paid off your mortgage or downsized which will reduce your monthly bills, but on the other hand you may plan to go on holiday more often, socialise with friends or spend time travelling which could cost you more.  It’s never too early to start budgeting so that you have a clear picture of the income you’ll need, and work towards achieving it.

How long is the puzzle going to take?

In general, we are all living longer, healthier lives. For some of us that might mean working for longer, either out of choice or because we need to, and for others it might mean a phased move into retirement working part-time or reduced hours. However you imagine what stopping work will look like, you should bear in mind the impact that a reduced salary or working for longer could have on your income.

Have you got enough pieces to complete it?

It’s all very well planning ahead, but what if you can already see a shortfall in your retirement expectations? There are a number of options which can help, including:

  • delaying your retirement date and continuing to pay into your pension savings for longer
  • increasing your payments by a small amount each year as soon as you can to reduce any deficit
  • lowering your expectations – accept you might have less than you’d hoped for and think about more careful budgeting
  • reviewing any other savings you have (ISAs for example) to make sure they are the best place for your long term savings

Whatever your age, and wherever you are on your savings journey, 4me has interactive tools and short informational videos to help you put the pension puzzle together. Find out more about how 4me can help you here.

 

Automatic saving for the people

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It’s been the law since 2012 that all employers must offer a workplace pension scheme and for all eligible workers to be automatically enrolled into one – you might have heard it called auto-enrolment or you may have seen the workplace pension adverts.

In the past the decision to be in a pension scheme was left entirely up to the individual, but for those choosing not to save for their futures, the problem of poverty in retirement became a serious issue. Auto-enrolment was introduced as a solution to help working people to save for retirement.

Auto-enrolment was introduced as a solution to help working people to save for retirement.

As a reminder to be auto-enrolled you need to:

  • work in the UK
  • not already be in a workplace pension scheme
  • be at least 22 years old, but under State Pension Age
  • earn more than £10,000 a year (tax year 2017/18)

Is this you? Yes? If so, then you’ll be in your workplace pension and should have had some information about it. If not, contact your Human Resources (HR) department for further guidance.

Important information! If you are lucky enough to have been auto-enrolled by your employer contributions are set to increase from 2018 – be aware that there will be a 2% increase between 2018-19.

Here’s what will happen from 6 April 2018:

When? Employer You Total
6 April 2018 2% 3% 5%
6 April 2019 onwards 3% 5% 8%

 

 

 

 

 

 

It’s worth remembering that these are the minimum contribution levels. You might be lucky enough to have a generous employer who will pay in more, or you could think about increasing your own contributions. Even a small increase could make all the difference.

Raising a family in 2018: can you afford it?

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With the birth of Will and Kate’s third baby hitting the headlines, what better time to take a look at what raising children means to an average UK family in 2018. How many children do we have on average, at what age and importantly, how much is it going to cost us?

One, two or three?

It might not surprise you to know that The Duke and Duchess of Cambridge are going against the trends of the day by having their third child. Whilst it’s by no means uncommon, stats from the ONS last year highlighted that the average number of children for a British family is now 1.9, down from the 2.2 their mother’s generation had.

Estimates suggest that costs for raising a family will have risen by 12% between 2012 and 2019.

Career or baby first?

The reasons for this dramatic drop in birth rate are perhaps not so surprising either. Women are choosing to have children later on, often because they are focusing on their career first. Ideas about having large families to ensure the survival of at least some children, or to look after the elderly (which were still prevalent even in the years following the Second World War) are now out-dated, and there continues to be a general downward trend in teenage motherhood.

Affording a family

But, perhaps the most telling reason of all is the cost. The Cost of a Child in 2017 report by CPAG highlights the rising costs of childcare, the impact of inflation and reduced child support from the Government, all contributing to a shortfall in affordability.

Expensive for two parents . . .

The report states that the cost of bringing up a child to the age of 18 for a two-parent family, is £75,436 but this figure doesn’t include housing, childcare and council tax which would see that price increase further if factored in. It’s also interesting to note that calculations on Moneysupermarket suggest raising a girl is more expensive than raising a boy.

. . . but lone parents are even worse off!

The costs are even higher for single parent families who are often at the mercy of paying for the additional childcare another parent could provide, with basic costs amounting to £102,627.

There is help for working families in the form of childcare vouchers (changing to the new ‘Tax-free childcare’ system in the next six months or so). You can read more about it in our recent blog.

Although a third child for the royals is not likely to present any additional financial pressure, estimates suggest that costs for raising a family will have risen by 12% between 2012 and 2019 so the future for the average UK family looks increasingly expensive! There is lots of online financial planning support available, but www.moneysupermarket.com has some of the best tips around to help your money go further.

Get ahead of the game: start thinking about your common wealth

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The next couple of weeks will see the media awash with inspirational athletes all striving for the chance to win gold, silver or bronze medals in the Commonwealth Games – a truly worthy way for those individuals to add their names to the history books and some precious metal to their medal cabinets.

But the idea of all that expensive hardware started me thinking . . . about wealth, the future and more specifically about saving and how we should be starting to think about our ‘common wealth’ in a much more holistic way.

If you start planning effectively now you could be looking forward to the ‘golden years’ in your retirement.

Life goals

We all aspire to reach certain milestones in our lives, and many (if not most) of these are intrinsically wrapped up in our finances. It may be aiming to buy your own home, get married or put your children through university – you may have big plans for when you eventually stop working, and all of these have a significant cost attached to them.

It’s worth taking some time to really think about your aspirations first, before you even consider how you’re going to afford them! Consider your timescales – these may be really vague and often dependent on reaching certain stages in your life before they are likely to become reality – but it’s a good idea to know what you’re aiming for.

Future plans

Once you’ve got some idea of what your goals are, look at your finances from a much broader and longer term perspective than you might ordinarily – particularly when considering your retirement goals.

Make sure you build a holistic picture of your retirement income – and if you are married or have a partner, it’s really important to factor in their retirement income too. Things to consider that might be a part of your ‘common wealth’ are:

  • your current workplace pension
  • pensions from previous employers
  • what State Pension you might be entitled to (take a look at the State Pension calculator for an estimate)
  • other sources of income
  • your house and any other property you own (rental)
  • inheritance
  • shares/dividends/premium bonds

Going for gold

The trick is to really see the bigger money picture when you are thinking about your finances and to put plans in place early to save for and afford those long-term goals.  You may not be aiming to add medals to your common wealth, but if you start planning effectively now you could be looking forward to the ‘golden years’ in your retirement.

Happy new tax year!

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Tax can be confusing at the best of times and people are often baffled by how it all works. Put simply, income tax is a tax you pay on your earnings – but you do not have to pay tax on all types of income.

You do need to pay income tax on things like:

  • money you earn from working
  • profits you make if you’re self-employed
  • some State Benefits (e.g. Jobseekers Allowance, Carer’s Allowance)
  • most pensions (e.g. State Pension, employer and personal pensions)
  • rental income (i.e. if you own a house and rent it out)

As of 6 April 2018, the Personal Allowance will increase to £11,850.

On the plus side, you do not have to pay income tax on things like:

  • National Lottery or premium bond wins
  • interest on savings within your savings allowance
  • Individual Savings Accounts (ISAs) and National Savings Certificates
  • some State Benefits (e.g. housing benefit, child tax credit)

Most people in the UK have a ‘Personal Allowance’, which entitles them to a certain amount of tax-free income. This is the amount of money you will receive before you have to pay tax. Currently, the standard Personal Allowance is £11,500 (for the 2017/18 tax year) but as of 6 April 2018, this will increase to £11,850. This allowance is then translated into a tax code, but did you know that your personal tax code changes each year?

You can check your Income Tax online to see what your tax code is, how it is worked out and how much you are likely to pay. Your tax code will usually start with a number and end with a letter. For example,

  • 1150L is the current tax code used for most people who have one job or a pension;
  • 1185L is the code that will be used for 2018/19 tax year.

For the UK, each tax year starts on 6 April and ends on the 5 April the following year. Anyone who is required to file a tax return will receive a notice letting them know they need to do this for the year that has ended.

For further information on money and tax in general, visit www.gov.uk/browse/tax. There is also lots of useful information on other topics such as how to deal with HM Revenue & Customs, Inheritance Tax and National Insurance.