What would you do with a long retirement?

Enable’s IFAs in Bishop’s Stortford know that an early retirement can look very attractive but stopping work can suddenly bring a big change of status and you can find that days that were busy with commuting, meetings and deadlines are now long and empty. Others do not find this at all and fill their time with travel, voluntary work and hobbies to make a life just as fulfilling as working.

Many people of retirement age have load more energy, current  retirees just aren’t as tired out as previous pensioners because they  are part of a generation that was great in number but with relatively few children and elderly parents dependent on them, so they were able to be pretty economically productive, by largely working less than their predecessors. According to analysis of OECD and Bank of England data by the International Longevity Centre, over their lifetimes, those retiring today have worked an average 23 hours per week, versus 30 hours for those retiring in 1970 a third less!

They have also enjoyed far better health, thanks to improving diets and medical care. Dr George Leeson, co-director of the Oxford Institute of Population Ageing at Oxford University, believes that soon 65-year-olds will be living another 35 or 40 years as the norm. 'Everything is going to change', he said. 'That life extension that we’re seeing is not time spent in frailty, they are not inactive years.'
It could mean a whole new phase of life in late middle-age, encompassing retraining and extra education. 'At the moment we tend to think of our lives in thirds,' Dr Leeson said. 'Divided roughly, we educate ourselves for a third, work for a third and are retired for a third. If you want some help talking through how you are going to operate for the final third of you life Enable’s IFAs are here to help.


Issued by: Enable Independent Financial Life Planners • 
25c North Street, Bishops Stortford, Herts CM23 2LD • Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

http://www.thisismoney.co.uk/money/pensions/article-4025794/What-40-year-retirement.html

How much should we save for retirement?

Enable’s IFA's in Bishop's Stortford know that it is difficult to get through a day once you reach a certain age without thinking about how much you should save for retirement or to hear someone saying you’re not saving enough for retirement.  Unfortunately it is very difficult to give a clear and accurate answer to how much should we be saving it depends on a whole host of factors such as your age, income, circumstances, and what you want to do with your retirement at the end of the day.

Regardless of your personal circumstance and situation the key thing to remember is that anything saved to a pension is probably better than nothing and that, it’s never too late to start.  A good place to start looking at how much you might want to save to a pension is by looking at your age. One frequently cited rule of thumb is to half your age and then try and save this percentage of your salary each year. So for example, if you’re 30 you should try to save 15% of your earnings each year for your pension, if you’re 40, 20%, 50, 25% and so on.

These proportions of your salary can seem a tall order in the middle years especially if you’re still raising a family, paying for school fees, beginning to think about children’s weddings and supporting property buying. But it shouldn’t mean that you save nothing, a more sensible idea, might be to work out how much you can realistically afford each month. Calculate your monthly income and deduct essential expenses, remember to consider your debts. If you still owe money on expensive credit cards and loans it may be a sensible idea to pump any extra cash into paying down these debts before you start saving. It really is important to find a way to save alongside your outgoings.

If all the ins and outs seem a bit much being, really immediate and practical can help.  Have you ever thought of just trying to save a fiver a day? Savings can quickly grow this way.  However you want to save Enable’s IFA’s in Bishop’s Stortford are here to help.

Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE  

Downsizing plan to fund retirement?

Downsizing may seem an attractive part of preparing to fund your retirement for many with substantial properties that are nearly paid off and Enable’s experienced IFA’s in Bishops Stortford know that property can form a significant part of a retirement  plan.  But downsizing may not be plain sailing when you consider all the costs associated with buying and selling form the estate agency fees and the legal fees and the cost of moving not to mention the stamp duty on larger properties sometimes, downsizers may not find themselves able to unlock as much capital as they hoped for– even in a rising market. "If property prices have gone up it means you'll get more for yours when you sell, but it also means you'll have to pay more for whichever property you buy next. Also many people find that when they downsize they can't afford to buy a property they like in an area they like."

And the move might not be as attractive or convenient as you had hoped while you imagine you'll be able to manage with a smaller property after all the children have left home the reality could be different if grandchildren come along, fewer bedrooms, getting used to smaller kitchens, cramped living spaces and no off-road parking could fee to some like a real downshift in your lifestyle at the very time you want to start enjoying it.

Relying on property too heavily can mean putting all your eggs in one basket and it is difficult to get any real diversification when investing in property. For most people the best approach for long-term savings is a combination of pensions and ISA’s. Pensions provide initial tax relief which give your savings an immediate uplift but they are inflexible, whereas ISA’s can still be tax-efficient and you are able to access your money whenever you like. That's not to say that an investment in property cannot form a part of your retirement strategy but maybe not all of it.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Using property for retirement plans?

At Enable our IFA’s many recent surveys suggests that one-in-three people plan to use property to pay for their retirement, one set of research revealed that a third of those if spoke to plan to live on income generated by investment properties, while a little more than half said that they would sell their own home to fund their retirement. Patrick Connolly, an IFA said "People are either able to sell their main property and downsize when they get to retirement or buy additional properties and rent them out."

There are lots of reports and surveys that suggest landlords have been enjoying stable yields over recent years, with returns above the low interest rates on savings account. Capital values have of course also been rising too over the last bit of time, encouraging that very British tendency to trust in property.

Despite some of the current figures however, relying on property to keep you warm in retirement could be a risky strategy. "It should be remembered that property prices can fall as well as rise and this will be a real danger when interest rates start to rise and mortgage payments become that bit more expensive." For landlords there is also the risk that you'll have periods where your property is empty, so you would have to find the money to pay the mortgage if there is still money owing. You also need to be prepared for the costs and hassle associated with managing a rental property.

From an investment point of view it is always good to diversify, diversify, diversify. Pensions allow you to invest across a broad range of asset classes, and thereby spread your risk, if you want to talk about diversifying for your retirement funds Enables IFA’s in Bishop’s Stortford are happy to talk it all through.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Portfolio retirements

As the dust settles on the radical freedoms Mr Osborne outlined in last Wednesday’s Budget at Enable of Bishop’s Stortford our IFA’s can see more clearly that the changes will give future generations the opportunity to be creative with their pension and other assets. It seems clear that the changes will significantly increase an already emerging trend of what is being called "portfolio" retirement income, where people combine paid work with regular income from property or other investments and annuities.

If you are planning for retirement there will be the challenge of choosing among a far wider range of investment possibilities but essentially everyone will still be trying to do as all retirees have always had to do and that it to make their assets last as long as is needed while generating the maximum income from them. One retirement specialist said recently: "Income planning for retirement is, and always has been, about delivering a sustainable income to meet a client's needs. And nobody wants their pension to expire before they do."

Enable’s Independent Financial Advisors imagine that annuities could very well still form part of a savers' overall retirement income plan - although in many cases they are likely to play a far smaller role and it will probably just be one of several income streams. If you want help, to work out portfolio future Enable’s IFAs might very well be able to help.


Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Converting capital to income...

Retirement is a key milestone and a time typically when people assess their financial position and make decisions about how best to convert capital into income.  Buying a home has generally been a good financial decision for those now heading into retirement but it could prove an even better one with a bit of foresight.

Recently released data from the last Census showed us the growing importance of property wealth. In 2011 there were 9.2 million people aged 65 or over living in England and Wales – nearly a million more than a decade earlier. Over the same time, the proportion of those older people owning their homes has risen from 68 per cent to 75 per cent. And home prices in that time rose by 78 per cent – more than double the rate of inflation.

It is little surprise therefore that The Smith Institute said that the financial MOT should include advice on how housing assets can be utilised, particularly because of the high number of people whose property wealth outstrips their savings or pensions. It points out that housing wealth is more equally distributed than other forms of wealth such as pensions.

It is also true that as people progress through retirement, housing wealth typically becomes an ever larger proportion of overall wealth.  In a time of squeezed pension incomes and with state benefits under pressure, Enable's IFA’s might be able to help you consider how your property wealth can play a bigger role in delivering financial support as you head into later life.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.

Making sure you have enough money to retire on...

At Enable Independent we strongly believe that a flexible approach to life planning can enable you to work around economical and personal changes. This includes making sure that you have enough money to live on when you retire.

A new survey by LV (a large UK insurance broker) stated that men and women in retirement who have an income of £154 per week, are left with only £8 per week after essential living costs. They have also predicted that this situation will only get worse as the people over 50 find it harder to pay into pensions because of the rise in the cost of living. They have also estimated that £2.3 has already been lost in retirement savings as the over 50 continue to reduce their contributions.

They claim pensioners feel as though they are only left with what amounts to pocket money each week. This has forced millions of over 50’s to really rethink their retirement plans including working much longer than previously expected, 27% of over 50’s currently have no retirement plans in place.

If you are over 50 and are worried about your retirement plans, then give one of our IFAs a call and we will be able to give you impartial advice on how you can plan your retirement, and investments and possibilities that could help you to save for a securer future. 

Issued by: Enable Independent Financial Life Planners
 25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE. 

Sorting your Annuity, you might have to act quickly

If you are a man and aged 55 or more and planning to retire in the near future you need to get your skates on before new rules to be implemented in December could mean you receive less retirement income from your pension savings.

Men have on average received about 4% more income from their annuities than women, because women tend to live longer. But the EU gender directive, which comes into force on 21 December, will stop insurance companies using the sex of a pension policyholder to determine the income the policyholder receives when they cash in their savings and buy an annuity. Insurers have said they will rely more heavily on other criteria, to underwrite annuities, including the type of work a policyholder has done and whether they suffer certain medical conditions.

For men, the move means a sharp drop in annuity rates, building on a gradual decline over the past few years.  This means that men planning to draw their retirement income in the near future should consider bringing their plans forward to take advantage of differential rates. "Ideally, they should ask for a quote now, then repeat that process every 14 days," he says. "If they see the rate they are offered beginning to fall, it's a sign they should act very quickly to buy their annuity."

It is still best not to rush into anything before checking, IFA Enable can help you make sure you are doing what is best for the whole of your retirement portfolio.

The best steps to take to improve your pensions prospects

“Recent research by consultants Aon Hewitt found that DC members retiring today had pensions that were 18pc smaller than those of people retiring just three years ago, thanks largely to declining annuity rates. The average DC pension pot is worth just £56,000 today. If 25pc is taken as a tax-free lump sum, this leaves only £42,000 with which to buy an annuity.

Three years ago this would have bought an income of £1,400 a year for a 60-year-old man; today it secures just under £1,200 a year.”

To improve your pension prospects possibly the most important thing to do is to regularly check your contribution rate.  The bottom line is the more you put into your pension the more you should get out of it. 

What happens a lot is that people choose the lowest contribution level when the join a pension scheme and then never review it or change it.

“On average, private sector workers put around 9pc of their salary into a DC scheme (this includes their own and their employer's contribution). This compares with contribution rates of around 20pc in a final salary scheme.

Tom McPhail of Hargreaves Lansdown said: "Everyone should find out how much is being paid into their pension – if it is less than 12pc of your salary, it is not enough."

A good rule of thumb is to take the age at which you starting contributing to a pension, then halve it; this is the percentage of your salary that should be going into a pension each month.”

To review if you are getting the best out of your pension contributions Enable, IFA’s in Bishop's Stortford can help.

Don’t put your head in the sand about your pension

There is much in the news currently about public sector pensions and all the talk of strike action to protect them but the irony is that many in the private sector would be quite happy with some of the pension provision, even that currently on offer to public sector workers.  Pensions outside the public sector are much more patchy in their provision and might not be offering the kind of pensions people would have hoped for in the long run – a recent survey by Prudential showed that one in three workers didn't have any pension at all, which could lead to an impoverished old age if action is not taken to avert the situation.

Even of those who do have private sector pensions in place we at Enable, IFA’s based in Bishop's Stortford, would agree with the thoughts expressed this week in The Telegraph,  “the two thirds who have joined their workplace scheme need to take an active interest in how their money is being managed. If not, it could cost them in the long run.

A combination of low contribution levels, poor investment returns and falling annuity rates means many of these DC schemes will produce far smaller pensions than those paid through final salary schemes, where people typically expect to retire on half their salary.”

If you have concerns about how your pension is being managed or simply want to understand what it is you have let Enable explore it with you.

Which Pensions? So how much will you make?

Returns are based on the level of risk and fluctuation you are willing to take in pursuit of financial gain. For this reason, it is wise to alter your asset allocation over time by lowering your risk levels as you draw closer to retirement. This could be done by turning to either cash or fixed interests, such as gilts, Independent Financial Advice can help you with your risk assessment.

If you are investing in a collective investment scheme, every time you contribute to your pension pot, your money is pooled into an overall pension fund of which you own certain units or shares. You can think of it as a huge layer cake with hundreds of different assets stacked on top of each other and each time you invest, you are buying a small slice of it.

If you want to be a little more selective over which slice you buy and exercise some personal control over the investments in your personal pension can choose to invest in a self-invested personal pension (Sipp).

Sipps provide wide access to most funds and assets, as well as access to buying individual shares, commercial property and many other investment opportunities.

There are two key differences you will need to consider before choosing the additional option of self-investment for your personal pension; to utilise a wider and more flexible investment choice, you will pay higher charges for a Sipp than an investor who simply wants access to a cheaper index tracker or an insurance company managed fund in a stakeholder plan.

Most schemes allow full flexibility to stop contributions or move accumulated savings or future contributions to another fund, and there should not typically be any penalties for this. However, before you change your pension, you should always check the details in advance with  an IFA.

Which Pensions? - Personal pension options

With more and more of the workforce having to be flexible and fewer and fewer young people heading for a job for life or even a career directions for life remind them about personal pension options.

The alternative private pension or personal pension, is offered by a provider such as an insurance company, High Street bank, building society or most typically, a pension company. You do not get any contribution into this from your employer, but it may offer more flexibility over how and where the money is invested.

The success of the investment and the fees charged by the provider will determine how much you get on retirement.

Remind them that at the moment you have to do most of the legwork especially if they are self-employed.

They will have to go and sort this out but you can also inform them that from 2012, the government wants all firms to offer a pension to their workers and they will be enrolled automatically unless staff opt out.

If employers do not offer membership of a pension scheme, they will have to enrole their staff into the new National Employment Savings Trust (Nest) set up by the government. To be enrolled, staff must be aged 22 or above, earn more than £5,715 a year, and have been in the job for at least 13 weeks.

Pensions experts have suggested that contributions into this scheme will still not be enough for today's young people to have a comfortable old age, but the Pensions Minister Steve Webb says it will get youngsters into the habit of saving for retirement.

If like many young people they are not so keen to heed the advice of their parents why not put them in touch with an IFA.  Enable Independent of Bishop's Stortford will happily give advice to any young person wanting to plan for their future.

State Pensions - that doesn't sound like much to live on?

Any self respecting teenager let alone 20 something will be able to figure out that current state pensions do not sound like much to live on.  Pensioners can also get money from the benefits system but this still means money can be tight for many years, even if you have worked for your whole life.

The latest figures from the Office for National Statistics show that 53% of single UK pensioners had an income of less than £10,000 in 2008-9.

So you really need to hammer home that it really does count to start saving early.  Teach them about compound interest because compound interest means if you save regularly from a young age, you will be better off than if you save more later in life.

Most pensions experts say that you should top-up the pension provision from the state with a workplace pension or a private pension.

Explain to them that In a final-salary scheme, the investment risk is taken by the employer and you are guaranteed a retirement income based on pay and length of service.

But generally a pension is a long-term investment. Remember investments, unlike savings, can go down or up in value depending on the success of the investment - such as shares on the stock market.

Explain to them that you will not be able to spend the money you put in now until you retire. However you do not have to pay much tax on this investment.

Let them know that if you join a workplace pension scheme, money comes out of your pay packet and into a pension pot. Your employer also puts money in, and there is tax relief on all this from the government.

You can then tell them that when you retire, the pot of money that you have built up can be used to buy a regular income in retirement, called an annuity.You  are never too young to start saving for a pension, get your children to talk to an IFA about planning and saving for their futures

SOS campaign for better interest rates

It’s shocking news that, “The value of UK savings has been eroded by £50bn in the past year because of inflation and low interest rates”, say the Save Our Savers a campaign group. It is particularly galling if you have worked, saved, paid your taxes, worked, saved and paid your taxes to find that you are bailing out those who didn’t.

Save Our Savers wrote to each member of the Bank of England's rate-setting committee urging them to raise the Bank rate recently to help pensioners and encourage saving. But the Monetary Policy Committee kept the rate on hold at 0.5%, allowing borrowers to continue to benefit from rates remaining at the record low.

In a plea to all nine members of the MPC ahead of the recent decision, Save Our Savers said that "a country without savings is a country without a future", the holding of interest rates at a record low could have a permanent impact. It warned that those on fixed incomes, such as pensioners, were suffering terribly from the combination of extremely low interest rates and above target inflation. "For many this is not a temporary setback. Its effect will permanently reduce the value of their future income," the letter said.

If you are one of the savers who are being hit hard by the record low interest rates IFA’s like Bishop Stortford’s Enable Independent might be able to help you rethink your investments and balance the books in these turbulent times.

Getting rid of debts is a good place to start financial planning

Of course before you can really start to save it is best to pay down any debts. This month The Bank of England reported that homeowners paid £5.8bn off their mortgages in the first quarter of 2011. That followed a record £7.1bn reduction in housing debt in the last three months of 2010.

The Bank of England's housing equity withdrawal figures revealed that householders have now been paying down their average mortgage debt for three years in a row. It means that, since the middle of 2008, homeowners have invested a total of £63.7bn in their properties.

Before the credit crunch the opposite situation was the norm, with persistent housing equity withdrawal between 1997 and the first quarter of 2008. In fact, the record quarterly housing equity withdrawal was the £13.4bn recorded in the first three months of 2007

But the paying down of mortgages is bad news for the high street, David Birne, an insolvency practitioner at HW Fishe. "The reduction of mortgage debt is always a good thing for the individual household but when it happens on such a scale and over such a time period it can have major ramifications for business, as less money makes it on to the high street.

With so much uncertaintly around interest rates and employment it is hardly surprising individuals are protecting their own interest first. If you want to review the best way to reduce your mortgage and save,  IFA’s in Bishop Stortford are here to help.

Make a financial plan for retirement...

The latest Future of Retirement report from HSBC has found that people expect to ease into semi-retirement in their mid-50s before stopping work at an average age of 62 – regardless of the fact that some 17 per cent of the 1,000 adults questioned don't know what their main source of retirement income will be and a further 21 per cent say they will rely on the state pension.

"The emergence of this ostrich generation is a real concern," says David Wells, head of investments, pensions and savings at the bank. "Britons know that they need to plan and save more for their retirement, but they are failing to turn this knowledge into action."

But those who don't bury their heads in the sand enjoy a significant financial and emotional premium, the bank found, as the 39 per cent of people with a financial plan have retirement savings worth more than four times those of non-planners, often managed through an IFA.

"We need a step-change to overcome this ingrained inertia and help people prepare for their retirement." Ian Naismith, head of pensions market development at Scottish Widows, said.

People would like to have an average annual retirement income of £24,300, a significant drop from the £27,900 they hoped to have in 2009.   But many who are not members of final salary pension schemes are saving an average of just 9% of their income into a pension each month, only three-quarters of the 12% of pay that Scottish Widows estimates people need to set aside in order to have a comfortable retirement. 

It is never too late to start saving, talk to one of Bishop Stortfordsleading IFA’s and make a pensions plan.

Readers might also be interested in the following relevant articles:

Might you be in the running for a SIPP? 
Saving for your retirement 
Pensions and the law

Saving for your retirement

In the current climate everyone should be thinking of reconsidering their pension provision.  IFA’s can help you review your pension at any stage of your life.

Some in the news say a simpler, more generous state pension of £140 a week would remove millions from benefits and provide an incentive to save without costing taxpayers more than the current system, a study argues.

Research for the National Association of Pension Funds found that under the existing system a third of pensioners would be eligible for the means-tested pensions credit by 2055, but under a single-tier state pension this would fall to 5 per cent. The NAPF said the study showed that of the Government's two options for state pension reform, the single-tier system costs no more than the current system and helps more people.

"It would particularly benefit low earners, women and the self-employed. It would also support 2012 pension auto-enrolment reforms by confirming that it 'pays to save' and that savings will not be eroded by means-testing," the NAPF said. 

Whatever your income it would be wise to reconsider your pension provision sooner rather than later.  Enable one of Bishop Stortford’s IFA’s can help you look at your options in the light of the current economic climate and help you start to make changes that work toward maintaining or improving the quality of life you can hope to enjoy in your hard earned retirement years.