Retirement might be a chapter of your life you’ve been looking forward to for years. Perhaps you’ve been daydreaming about how you’ll make use of the extra time, or you’ve already planned an adventure to kickstart your life after work.

Yet, for many people, retirement can be a difficult adjustment.

While work often means less freedom, it might provide you with a sense of purpose and a structure to your days and weeks. Suddenly stepping away from a routine you may have followed for decades can be jarring. So, if you feel adrift when you retire, you’re not alone.

Finding a new purpose you’re passionate about could be imperative to your happiness and wellbeing in retirement.

This practical guide offers some ways you could embrace a new lifestyle that balances freedom and purpose, including:

  • Discovering your passions
  • Finding a daily routine that works for you
  • Prioritising your physical and mental health
  • Making time to connect with people
  • Playing a role in your community.

Download your copy of ‘How to find purpose and get the most out of your retirement’ to read practical tips and key areas you might want to consider when you retire. 

If you have any questions about how to get more out of your retirement, please contact us.

A man checking the news on his smartphone.

70 years ago, the BBC broadcast its first daily television news programme. Since then, round-the-clock news has become available, and you can get the latest headlines with a few taps on your smartphone. While being connected can be positive, for investors, it can make periods of volatility and choosing an investment even more difficult. Read on to find out why.

On 5 July 1954, Richard Baker delivered the latest news, which started with an update on truce talks being held near Hanoi, Vietnam, and an item on French troop movements in Tunisia. It wasn’t met with universal approval. Indeed, the BBC received feedback stating it was “absolutely ghastly” and “as visually impressive as the fat stock prices”.

Sir Ian Jacob, who was BBC director at the time, noted that there were challenges because many main news items are “not easily made visual”. However, he added that he believed it was the start of something “extremely significant for the future”.

But how does this relate to investing? 70 years ago, you may have read about investment performance or the latest tip in the newspaper or heard a segment on the radio. Now, you can find out about stock market movements in seconds, and it could lead to knee-jerk decisions.

Too much “noise” could lead to poor investment decisions

Imagine you hear about stock market volatility affecting your portfolio now. You may hear in the news how stocks are “plummeting” or that it’s the worst day for a particular index in a year. How do you feel? You might worry about what it means for your financial future. As a result, it could lead to you making rash decisions that aren’t right for you.

Yet, 70 years ago before there were daily TV news programmes on the BBC, you might not hear about the volatility right away. The market and your portfolio could even have recovered before you knew. 

Being in the loop when it comes to stock market movements can work the other way too. You might see a segment about how technology businesses are doing well, and it tempts you to invest without considering how it might affect your overall portfolio or risk profile.

So, being exposed to too much “noise” may lead to investors making decisions based on short-term movements. However, if you look at some of the big events, and their impact on stock markets over the last 70 years, it indicates that investors who stuck to their investment strategy could have benefited.

The last 70 years demonstrate why a long-term view often makes sense for investors

When Richard Baker sat down to deliver the BBC bulletin, the stock market was doing well. After decades of uncertainty due to the world wars, by the late 1950s, it was booming. Indeed, work began on the new Stock Exchange Tower in 1967, which became a London City landmark at 26 storeys.

The markets didn’t remain stable though. The early 1990s brought a recession that led to unemployment of more than 12% in the UK. Then, the dot-com bubble saw technology stocks soaring at the end of the decade as investors were excited by the widespread adoption of the internet and innovative start-ups before the bubble burst in 2000.

Countless historical events have affected the markets. In the last decade, the 2016 Brexit vote and the pandemic in 2020 led to markets falling.

Despite the turbulence and the attention-grabbing headlines of the last seven decades, the overall trend in investment markets is an upward one. Once you look at the bigger picture, it suggests investing with a long-term view is savvy for most investors.

Indeed, take a look at the FTSE 100 – an index of the 100 largest companies on the London Stock Exchange. It launched in 1984 and started with a benchmark of 1,000 points. On 3 May 2024, it hit a record high at 8,248 points.

Of course, you cannot guarantee investment returns. It’s important you consider your goals and remember that all investments carry some risk. You may want to consider your risk profile and wider financial circumstances when creating an investment strategy.

Get in touch to talk about your investment strategy

If you’d like to understand how to create an investment strategy that reflects your goals, or would like to review your current portfolio, please contact us. We’ll help you build an investment strategy that reflects your goals and circumstances.

Please note:

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

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A man using a laptop.

The number of retirees who could face an Income Tax bill is expected to rise. If your total income could exceed tax thresholds, there might be some steps you can take to reduce your tax bill.

The Personal Allowance is the amount of income you can receive before you usually need to pay Income Tax on the portion that exceeds the threshold. For 2024/25, the Personal Allowance is £12,570.

Crucially, the allowance hasn’t increased since the 2022/23 tax year and it’s currently frozen until April 2028. In contrast, your outgoings and income are likely to rise in line with inflation. So, even though your income might not increase in real terms, you could find a greater proportion of it is liable for Income Tax.

For example, the State Pension has benefited from large increases in the last two tax years under the triple lock. In April 2023, it increased by 10.1%, and then by a further 8.5% in April 2024.

As a result, those who are eligible for the full new State Pension receive £11,502 in 2024/25. So, you only need to receive a small income from other sources before you might need to start considering Income Tax in retirement.

Luckily, there could be steps you can take to reduce your tax bill, including these three.

1. Access the tax-free portion of your pension in instalments

You might know that you can access up to 25% (up to a maximum of £268,275) of your pension as a tax-free lump sum. But did you know you can also spread out this tax-free portion of your pension?

If you choose this option, each time you withdraw money from your pension, 25% of it will usually be tax-free. You can take different amounts each time to suit your needs if you’d like.

As well as potentially making your income more tax-efficient, this method could allow your pension to grow further. The money that remains in your pension will typically be invested, so it has an opportunity to deliver returns.

Of course, investment returns cannot be guaranteed and it’s important that your investments match your circumstances. When you retire, your risk profile may change, so reviewing how your pension is invested could be useful. If you have any questions about investing in retirement, please contact us.

2. Know which allowances could reduce your tax bill

There are tax-free allowances you may be able to use to reduce your Income Tax bill.

The interest earned on savings held outside of a tax-efficient wrapper may be added to your total income and could become liable for Income Tax as a result. However, many people benefit from a Personal Savings Allowance (PSA). So, the interest your savings earn might be a practical way to boost your regular income.

Your PSA depends on the rate of Income Tax you pay. In 2024/25:

  • Basic-rate taxpayers have a PSA of £1,000
  • Higher-rate taxpayers have a PSA of £500
  • Additional-rate taxpayers have a PSA of £0.

In addition, if you’re married or in a civil partnership, you may also be able to use the Marriage Allowance to increase your Personal Allowance.

If your partner doesn’t use their full Personal Allowance and you pay Income Tax at the basic rate, they may be able to transfer £1,260 of their Personal Allowance to you. It could reduce your overall tax bill by £252 in 2024/25.

We could help you understand which allowances might be right for you.

3. Supplement your pension by making withdrawals from your ISA

While a pension is often the main source of your income in retirement, you can supplement it with other assets.

During your working life, you might have built up savings or investments in an ISA. Now, you could use it to supplement your pension income. As an ISA is a tax-efficient way to save or invest, it could prove a useful way to boost your income without increasing your tax bill.

There might be other assets you can use to support you in retirement too, such as investments held outside of an ISA or property. However, you should be aware they might increase your tax liability. For instance, if you sold investments that weren’t held in an ISA, you might have to pay Capital Gains Tax (CGT) on the profits if you exceed certain thresholds.

We can help you understand how you might use other assets to fund your retirement goals.

Contact us to talk about your tax bill in retirement

Depending on your circumstances there could be other ways to reduce your Income Tax bill and you might be liable for other types of tax in retirement too, such as CGT. As part of creating a retirement plan, we can work with you to understand how to mitigate or reduce your tax liability. Please contact us to arrange a meeting.

Please note:

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

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

Food bank volunteers packing boxes.

According to a report from the Charities Aid Foundation (CAF), in 2023, three-quarters of people in the UK supported a charity in some way.

Whether you donate money, fundraise, or volunteer your time, you might want to consider how to extend your actions to create a charitable legacy in your will – and there could be tax benefits to doing so.

The CAF report noted that despite the rising cost of living placing pressure on many families, the UK public donated an estimated £13.9 billion to charity last year – up by £1.2 billion when compared to 2022. It’s thought that at least half of people in the whole country donate to charity.

There are plenty of excellent reasons why you might support national or local charities, and if it’s important to you now, updating your will to leave a charitable legacy could be attractive too.

Here are three fantastic reasons you might want to create a charitable legacy.

1. Support a cause that’s important to you

Leaving a gift to a charity in your will could be a great way to support a good cause that’s important to you.

The CAF report found 32% of people choose a charity to donate to based on their personal experiences. So, if you’ve benefited from the services of a charity during your lifetime or witnessed the positive impact they have on communities, you might want to return the goodwill by leaving them a portion of your estate.

Similarly, 28% said family and friends influence which charity they support, so it could be a way to honour loved ones.

Charities often rely on donations, including those you might leave in your will. Charity Guide Dogs for the Blind Association states that almost 2 in 3 of its guide dogs are funded through gifts from wills, and without legacy bequests, it wouldn’t be able to offer vital support to as many people.

2. Charitable bequests could lower the value of your estate to reduce an Inheritance Tax bill

If your estate could be liable for Inheritance Tax (IHT) when you pass away, a charitable legacy could be a useful way to reduce the potential bill.

In 2024/25, the IHT nil-rate band is £325,000 – if the total value of your estate is below this threshold, no IHT will be due. Many estates can also make use of the residence nil-rate band if you leave your main home to your children or grandchildren. In 2024/25, the residence nil-rate band is £175,000.

Importantly, you can pass on unused allowances to your spouse or civil partner. So, if you’re planning as a couple, you may be able to leave up to £1 million before IHT is due.

While £1 million may seem high, once you start factoring in all your assets, particularly property, you might be closer to the threshold than you initially think.

There are often steps you can take to reduce a potential IHT bill, including leaving gifts to charity.

The value of the charitable donation is typically removed from the value of your estate before IHT is calculated. As a result, a charitable gift could be used to bring the value below IHT thresholds so your family don’t face a tax bill, while also supporting a good cause.

3. Leaving at least 10% of your estate to charity could reduce the Inheritance Tax rate

Another option if you want to use giving to reduce an IHT bill is to leave at least 10% of your estate to charity. This would reduce the IHT rate from 40% to 36%.

Depending on your estate, this rate reduction could mean you leave more to loved ones while creating a charitable legacy.

You can update your will to leave a charitable legacy

A common way to leave a charitable legacy is to make a charity a beneficiary of your will.

As part of your will, you could state that a charity should receive a set amount from your estate, a portion of the total assets, or what’s left after other gifts have been given. You can even choose to pass on certain assets to a charity, such as shares or material items.

While you can write a will yourself, you may want to seek professional legal advice. A solicitor can minimise the chances of mistakes or disputes occurring by ensuring the wording of your will is correct and highlighting potential contradictions or issues.

Contact us to talk about creating a charitable legacy as part of your estate plan

If you want to leave a charitable legacy, we can help you make it part of your wider estate plan. Reviewing charitable giving alongside other aspects of your estate plan may lead to you identifying ways to make tax-efficient donations and ensure they align with wider goals. Please contact us to speak to one of our team and arrange a meeting. 

Please note:

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

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate or will writing.

A woman looking at a receipt while shopping.

The uncertainty of how the cost of living will change during your lifetime can make long-term planning difficult. After all, how can you be certain how your expenses will change in 20 years or more? If you’re worried about the effect of inflation on your security, a financial plan could provide peace of mind.

Research from Ipsos found that inflation is the number one global concern in 2024. Among the 29 countries that are part of the research, 35% of people say inflation is their top concern – in Great Britain, 37% said they were worried about it.

Given the soaring cost of living over the last two years, it’s not surprising that it’s on many peoples’ minds. Inflation has placed pressure on household budgets around the world, and it may have affected your long-term plans too. For example, you might have cut back your savings or pension contributions to reflect rising day-to-day costs.

In the UK, the Bank of England (BoE) aims to keep inflation at 2%. However, it began to rise above this target in mid-2021 following the Covid-19 pandemic and war in Ukraine. Inflation peaked at 11.1% in October 2022 – the highest figure recorded in more than 40 years.

While inflation is now nearing the BoE target at 2.3% in the 12 months to April 2024, you might be concerned about how another period of high inflation could affect you in the future. Luckily, a financial plan can help. Here’s how.

A financial plan could help you calculate how your assets and expenses will change over time

A key part of financial planning is understanding how to create long-term financial security. To do this, you’ll often consider how the value of your assets and your outgoings will change over time.

Cashflow modelling could help you visualise the data and see how your assets will change over decades.

You often start by inputting the value of your assets now, from savings to property. Then, you can assess how they might change during your lifetime. Some of the changes will be based on your actions. For example, if you’re regularly contributing to your pension, the value is likely to grow.

Other changes might be outside of your control, but you can make certain assumptions to give you an idea of your long-term wealth. For instance, if you’re investing, you might assume that the returns will be 5% each year based on your investment strategy.

Investment returns cannot be guaranteed, and there are likely to be years where your portfolio falls short of or exceeds this assumption. Even so, cashflow modelling can still provide a useful indicator of the value of your assets at different points in your life.

You’ll also need to input your expenses and factor in how these might change too. This is where you may want to consider inflation. You may account for the cost of living rising by 2% each year in line with the BoE’s target.

Of course, the unexpected does happen, including inflation rising above the BoE’s target. Cashflow modelling could help you understand how the unexpected might affect your finances.

Cashflow modelling may help you visualise the effect of high inflation

You can change the assumptions used in cashflow modelling to answer your questions and understand how different scenarios would affect your finances.

For example, you can change the data to calculate how inflation of 8% when you’re retired would affect how quickly you deplete your pension or other assets.

With a clearer idea about the effect high inflation could have on your financial circumstances, you might take steps to reduce the potential impact. You may choose to ensure you have other assets to fall back on to provide peace of mind, or you could focus on how to grow your wealth through steps like investing so you’re in a better position in a high-inflation environment.

Cashflow modelling can be useful if you want to model other scenarios too. For example, you could see how:

  • Taking a lump sum from your pension would affect your income in retirement
  • You’d weather a financial shock if you were unable to work due to an illness
  • Lower than expected investment returns may impact the value of your estate
  • Gifting assets to loved ones could affect your long-term financial security
  • Needing to pay for care later in life could affect your wealth
  • You could retire early by taking a lower income or increasing contributions during your working life.

So, financial planning could be beneficial if you want to be prepared, both for reaching your goals and for the unexpected.

Contact us to talk about how to manage the impact of inflation on your finances

There could be steps you can take to manage the risk of inflation affecting your finances in the future. Please contact us to arrange a meeting to discuss your long-term financial plan and how we could support you.

Please note:

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

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate cashflow planning.

An estate agent showing a couple a property.

Rising interest rates have been big news over the last couple of years, with many mortgage holders seeing their outgoings increase. It’s not just individual families that have been affected, it’s having a wider impact on the property market too.

To tackle high inflation the Bank of England (BoE) started increasing its base interest rate at the end of 2021. Before that, the base rate was at a historic low of 0.1% in a bid to stimulate the economy following the Covid-19 pandemic. A series of rises means that, as of May 2024, the base rate is 5.25%.

An interest rate of 5.25% isn’t high when you compare it to the long-run average. Older generations who were paying a mortgage in the 80s and 90s will remember interest rates reaching double digits. Yet, after a decade of very low rates and soaring house prices, the rises over the last two years have affected the market.

The average mortgage term is longer

The trend for longer mortgage terms has been influenced by rising property prices, and now higher interest rates are playing a role too.

Traditionally, first-time buyers would take out a mortgage with a 25-year term. However, affordability challenges mean homeowners are choosing to repay their mortgage over a longer period to reduce their regular outgoings.

According to a report from UK Finance, around 1 in 5 first-time buyers were taking out a mortgage with a term of at least 35 years at the end of 2023.

A longer mortgage term might be useful if you’re worried about how you’ll meet repayments or need to stretch your affordability to secure a mortgage. Yet, it will usually mean you pay far more in interest overall. So, saving money in the short term could harm your long-term finances.

For example, a first-time buyer borrowing £200,000 through a repayment mortgage with an interest rate of 4.5% would pay:

  • £1,111 a month and £133,370 in interest over a 25-year mortgage term
  • £946 a month and £197,337 in interest over a 35-year mortgage term.

In addition, mortgage holders might need to consider when they’ll finish repaying their mortgage. The average age of a first-time buyer is rising and coupled with longer mortgage terms, it could mean more households will feel financial pressure later in life.

Property prices are still rising, but the pace has slowed

Rising interest rates have placed pressure on household finances. So, it’s perhaps not surprising that the value of the average home is growing at a slower pace than it once was.

While some experts predicted that house prices would fall in 2024, figures suggest they’ll continue to grow, but at a slower pace. Halifax’s house price index shows house prices briefly fell in 2023, but are now growing again.

In April 2024, the value of the average home increased by 1.1% when compared to a year earlier.

Amanda Bryden, head of mortgages at Halifax, said the stagnating values reflect a “housing market finding its feet in an era of higher interest rates”. While stagnating prices might not be good news if you’re planning to sell property soon, Halifax noted that a period of stability could give homebuyers more confidence. 

The mortgages available are changing quickly

The mortgages a lender offers are influenced by the market and the BoE’s base rate. As a result, there’s been a lot of volatility that might have affected those searching for a new mortgage deal.

According to Moneyfacts, as of March 2024, the average shelf-life of a mortgage was just 15 days. For homebuyers, it could be frustrating to find a deal that suits your needs, only to find it’s been withdrawn before you can apply. Rapid changes can place more pressure on those seeking a mortgage.

A mortgage broker can be useful in this scenario. They’ll understand the criteria of various lenders and work on your behalf to identify mortgages that could be right for you. If you’d like our support when searching for a mortgage, please get in touch.

Despite the challenges, sales volumes are 12% higher than last year

There were concerns that the challenges homebuyers faced would lead to the property market stagnating, but sales are higher than they were a year ago.

According to statistics from Zoopla, as of April 2024, sales volumes were up 12% year-on-year.  Indeed, if the market stays on the same track for the rest of the year, it’s estimated that 1.1 million sales will take place throughout 2024, around 100,000 more than in 2023.

So, whether you’re thinking about selling or buying property, you shouldn’t let the effect of rising interest rates put you off – there could still be plenty of opportunities for you.

Contact us if you’re searching for a mortgage

Searching for a mortgage can be daunting, especially when the property market is affected by higher interest rates and uncertainty. If you’d like support, we’re here to help you. Please contact us to arrange a meeting.

Please note:

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

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

A family with young children playing Twister.

Consider the benefits of financial planning. If the first advantage that comes to mind is the opportunity to grow your wealth, you might be overlooking some of the intangible benefits that could improve your wellbeing.

Last month, you read about the potential financial benefits of working with a financial planner and how it could help you reach your goals.

Now, read on to learn more about some of the wellbeing benefits. While intangible benefits can be harder to quantify, they are just as important and might be something you value as much as growing your wealth.

1. Working with a professional could offer you peace of mind

A report in Professional Adviser suggests that one of the key reasons many people use a financial planner is the peace of mind it offers. In fact, in a survey of people with more than £300,000 of investable assets, more than half said this was important to them.

Worrying about your finances may affect your mental health. A survey from Standard Life found that 47% of women and 33% of men feel worried, anxious, stressed, or overwhelmed due to economic uncertainty.

A financial plan can help you focus on what you want to achieve in the future and the steps you might take to provide security, even if the unexpected happens. As a result, it could support your overall mental wellbeing.

2. A financial plan could improve your knowledge and confidence

Having someone you trust to turn to when you have financial questions could take a weight off your mind, and it could boost your finances too.

According to research from Moneybox, two-thirds of UK adults are, on average, £65,000 worse off because of low levels of financial confidence and knowledge.

The study found that less than a third of people claim they are very confident when managing finances. What’s more, 64% said they have missed out on financial opportunities in life – 35% blamed a lack of financial knowledge and 29% cited low financial confidence.

When asked why they struggled to manage their finances, the participants said they didn’t know where to start, found the topic overwhelming or struggled because of jargon. Yet, just 14% had spoken to a financial planner.

Working with a financial planner could mean you feel more confident about the steps you’re taking.

3. A financial planner could give you more time to focus on what’s important

Ensuring your financial plan remains on track and continues to reflect your circumstances can be time-consuming.

As well as keeping on top of your finances, factors outside of your control could also affect your financial plan. For example, if the government made changes to tax allowances, it could potentially lead to a higher tax bill or an opportunity to improve tax efficiency.

When you’re working with a financial planner, you can rest assured that your finances are in safe hands and focus on what’s most important to you.

4. You’re more likely to reach your goals with a clear plan

Only 17% of people in the UK have a plan to achieve their long-term money goals, according to data from the Aegon Wellbeing Index. In addition, only a quarter of people surveyed said they have a concrete vision of the things and experiences their future self might want.

If you don’t clearly outline your goals and how you’ll achieve them, it can be difficult to measure your success and stay on track. Understanding what you want to achieve now and in the future is an integral part of financial planning.

While you might link effective financial planning to growing your wealth, that’s not always the case. Indeed, in some circumstances, your plan might involve depleting your assets to allow you to reach your goals. For instance, when you retire, you’re likely to switch from accumulating wealth to turning your assets into an income stream.

A financial planner can help you assess how to manage your finances with your goals in mind.

Contact us to talk about your financial plan

If you’d like to discuss how a financial plan could support your wellbeing and help you create a path to reaching your goals, please contact us to arrange a meeting.

Next month, read our blog to discover how financial planning could lead to you making decisions that align with your aspirations and deliver even greater value.

Please note:

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