The pros and cons of choosing joint life insurance

If you and your partner are considering taking out life insurance, one question you may want to answer is: Would single or joint life insurance be better suited to us?

Life insurance is a type of financial protection that would pay out a lump sum if you passed away during the term. The payout would go to your beneficiary, who may use it how they wish, such as to pay off the mortgage, fund day-to-day costs, or allow them to take time off work.

While it can be challenging to think about, life insurance could provide your loved ones with financial security at a difficult time.

Yet, surveys suggest that many households are overlooking the value of life insurance.

According to a report in FT Adviser, almost 3 in 10 under-40s who have a mortgage haven’t taken out life insurance. It could potentially leave their partners struggling to pay the mortgage and other outgoings should the worst happen.

Similarly, Cover Magazine revealed that 72% of over-50s don’t have life insurance either. While some in this group will have paid off their mortgage, life insurance could still provide a valuable safety net for loved ones if you pass away.

If you have a partner, one consideration when reviewing life insurance is whether to take it out separately or jointly. There are pros and cons to both options and it’s important to consider what’s right for you.

The advantages of choosing joint life insurance

Joint life insurance is usually more cost-effective

To maintain the cover life insurance provides, you’ll need to make regular premium payments. When compared to two single life insurance premiums, the cost of joint life insurance is typically more cost-effective.

Joint life insurance could be useful when covering joint commitments

If you and your partner want the same level of cover to reflect joint commitments, joint life insurance could make sense.

Taking out a mortgage is often a trigger for reviewing life insurance, as you may want to ensure your partner could pay off the debt should you pass away. In this case, joint life insurance could be used to provide a way to do so should the worst happen.

Joint life insurance might be more convenient

When applying for joint life insurance, you’ll usually only need to complete one form between you and there will only be one premium payment to factor into your budget. For some, this could be more convenient and make joint life insurance attractive.

The drawbacks of opting for joint life insurance

Joint life insurance will usually only pay out once

Typically, joint life insurance will have no survivor benefits. This means it will only pay out once.

So, if your partner passed away, you’d receive a lump sum but you’d no longer be covered. This might be a concern if you have children or other dependents, as, if you later passed away, they would not receive a life insurance payout unless you took out further cover.

Premiums could be higher if one person is considered a risk

While joint life insurance is often more cost-effective, that’s not always the case. An insurer will consider the risk of you passing away when reviewing your application and may consider health and lifestyle factors.

If you or your partner has an existing medical condition or has lifestyle habits that shorten life expectancy, such as smoking, the premiums are likely to increase. In some cases, this could mean premiums end up being higher for the other party.

Joint life insurance might not be right for your relationship

Finally, you might want to consider relationships before deciding if joint life insurance is right for you.

For example, if you have a child from a previous relationship that you’d like some or all of a life insurance payout to go to, a joint option might not be appropriate for you.

Similarly, it’s important to consider what would happen if your relationship broke down. Providers may divide joint life insurance in these circumstances, but it isn’t always possible and it can be complex. In contrast, with single life insurance, you could simply change the name of your beneficiary if you need to and maintain the cover.

Contact us to discuss financial protection

As well as life insurance, other types of financial protection could offer you peace of mind and security when you need it most. To discuss which options could be appropriate for you, please contact us.

Please note:

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

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

How to turn your child’s Christmas gifts into a nest egg

Christmas is a magical time of year, especially for young children who will be eager to see what Santa has left them under the tree. Along with their gifts, your child may receive money that could be put towards long-term goals and milestones.

It’s likely not just you who will be buying presents for your child this year. Indeed, according to a survey published in Your Money, in 2023, grandparents collectively spent £4.3 billion on younger family members – roughly £140 for each grandchild.

With your child being lucky enough to have so many treats, you might want to think longer-term when deciding how to use the money your child receives during the festive period. Rather than buying more toys, it could be used to create a nest egg that may offer them a vital head start when they reach adulthood. While it might not seem as fun as the latest gadget now, your children are likely to thank you in the future.

So, here are three ways you could use your child’s Christmas money to build a nest egg.

1.  Place money in a savings account

One of the simplest steps you can take to start building a nest egg is to place financial gifts into a savings account.

The money is usually accessible, so you could use it for short-term savings goals. It could also be a valuable way to teach your child about the benefits of saving and how interest works.

While interest rates have increased over the last two years, when you’re saving for a long-term goal, inflation could still erode the value of your child’s money in real terms. As the cost of living rises, if the savings don’t grow at a faster pace, the value is falling in real terms. So, you may want to consider how and when you’d like the nest egg to be used.

If you’re saving for your child, a Junior ISA (JISA) may be an option you want to weigh up.

JISAs offer the same tax benefits as their adult counterparts – interest earned on savings isn’t liable for tax. In addition, the interest rates offered may be higher than a standard savings account.

In the 2024/25 tax year, you can add up to £9,000 to JISAs on behalf of your child. However, keep in mind that the money held in a JISA isn’t accessible until the child turns 18.

2. Invest the money to support your child’s long-term goals

If you plan to build a nest egg for long-term goals, investing might be the right option for you.

Investing on behalf of your child presents an opportunity for the money to grow at a faster pace than it would in a savings account. However, returns cannot be guaranteed and investments may experience volatility. As a result, it’s often a good idea to invest with a minimum time frame of five years.

You should also consider what level of risk is appropriate for your goals when investing. This is an area we could help you with.

Again, a JISA may be an option to consider if you want to invest your child’s money. Indeed, official statistics show almost 6 in 10 JISAs are investment accounts.

A Stocks and Shares JISA provides a way to invest tax-efficiently – investments held in a JISA are not liable for Capital Gains Tax.

3. Use the money to start a pension

It might seem strange, but starting a pension on behalf of your child before they even think about entering the workforce could be valuable.

As the money held in a pension is typically invested for decades, it has an opportunity to grow throughout their life.

Longer lives and other financial pressures mean younger generations could find it more difficult to retire comfortably. Indeed, according to a Canada Life survey, more than two-thirds of people believe retiring in your 60s will become a thing of the past.

So, while retirement might be a milestone that’s more than 50 years away for your child, contributing to their pension now could offer them more financial freedom later in life.

There isn’t a minimum age for opening a pension. Only a parent or guardian can open a pension for a child, but once it’s set up, other third parties, such as grandparents, may make contributions.

Much like an adult pension, the contributions may even benefit from tax relief which provides a further boost to the nest egg. Non-taxpayers, including children, can usually pay up to £2,880 into a pension in 2024/25 while retaining tax relief.

The key benefit to adding Christmas money to a pension is the chance it has to grow – a relatively small contribution now could grow significantly when you consider how investment returns may compound. Of course, investment returns cannot be guaranteed.

If you’re considering this option, keep in mind that your child would not be able to access the money until they reach pension age, which is 55 and rising to 57 in 2027, and could rise further in the future.

As a result, contributing to a pension for your child may be an option you want to consider after you’ve taken other steps, such as maximising their JISA allowance.

If you’d like to talk about how to set up a pension for your child or balancing investment risk, please get in touch.

Contact us to discuss how you could provide your child with financial security

If you want to provide your child with financial security and more options when they reach adulthood, there may be other steps you can take too. For example, you might want to set up regular contributions to their JISA or put money aside to support them through university.

We could help make your family’s future ambitions part of your financial plan. Please get in touch to talk about your goals and how you might reach them.

Please note:

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

All contents are based on our understanding of HMRC legislation, which is subject to change.

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 pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts. 

Financial fears could be holding back millions of retirement dreams

Research suggests the fear of running out of money later in life could be holding back millions of retirees. While spending too much too soon is a risk for some retirees, it could also mean you miss out on the lifestyle or experiences you’ve been looking forward to.

According to a report in MoneyAge, 30% of retirees – the equivalent of 6.4 million people – said spending money makes them anxious. A similar proportion agreed they often don’t spend money on things they need because they’re worried about the future.

Interestingly, a quarter of those questioned said their emotions influence their financial decisions.

In some cases, retirees might need to be mindful of their budget to ensure their assets last their lifetime. Yet, the responses suggest that many retirees are reducing spending based on emotions, rather than a financial review.

Spending too much too soon is a risk many retirees may want to consider

Running out of money later in life may be a concern if you choose to access your pension flexibly or are using other assets to complement a reliable income.

When you use flexi-access drawdown to access your pension, you can adjust the income you receive to suit your needs. This provides you with greater flexibility, which could be useful if your income needs change or you have a one-off expense.

However, you’ll also need to consider how much you can sustainably withdraw from your pension each year. If you take a higher amount in your early years of retirement, it could leave you with a shortfall in the future. In some cases, that could lead to an inability to meet financial commitments or mean that you need to adjust your lifestyle.

So, the concerns raised in the survey are valid ones. Yet, being overly cautious could present a different type of risk too.

You could risk the retirement lifestyle you’ve worked hard to secure, even if you have the assets to achieve it because fear means you’re holding back.

A retirement plan could help you manage financial fears

A bespoke retirement plan could help ease your financial fears when you retire.

As part of creating a retirement plan with your financial planner, you might use a tool known as “cashflow modelling”. This could help you visualise how your wealth and assets might change during your lifetime.

A cashflow model uses information about your current finances and your plans to project how your wealth will change. So, you might want to model whether withdrawing £35,000 a year from your pension could mean you run out of money later in life. Or calculate what would happen if you wanted to withdraw a lump sum to fund a one-off cost, like going on a luxury cruise.

Not only does cashflow modelling help you understand how your retirement plan could affect your finances, but it may also be used to understand the effect of events outside of your control. For example, you might want to understand how your pension would fare if you needed to replace your home’s roof unexpectedly, or how a period of high inflation may affect your long-term finances.

As you can model these scenarios that might be a cause of financial fear, you could find your worries are eased when you realise you’re in a better position than you initially thought. Alternatively, it may highlight a potential gap that you might be able to close as a result.

It’s important to note that the projections from a cashflow model cannot be guaranteed. The data will be dependent on the information provided and will make some assumptions, such as the rate of inflation or expected investment returns.

Yet, cashflow modelling could still be a useful way to understand how the decisions you make might affect your financial security in the future.

One of the challenges of managing your finances in retirement is that it often requires a mindset shift.

During your working life, you might have focused on accumulating wealth. This may have involved contributing to your pension, creating an emergency fund, or investing with the aim of delivering long-term growth. During this period, you might have formed positive money habits that helped you reach your goals.

When you retire, many people switch to decumulating wealth as they use assets to fund their lifestyle. It can be more difficult than you expect to change the habits you’ve formed to suit the next chapter of your life.

So, it’s not just fear you may have to consider when understanding what might be influencing your financial decisions in retirement.

Again, a retirement plan could give you the confidence to start using the assets you’ve accumulated during your life to support the retirement goals you’ve been working towards.

Get in touch to understand your retirement income

If you’d like to understand how to use your pension to create a sustainable income in retirement or how you might use other assets, please get in touch with us. We could work with you to create a tailored retirement plan that considers both your financial situation and your goals.

Please note:

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

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts. 

3 simple questions that may help you update your life goals for 2025

As 2025 draws nearer, now is the perfect time to think about your aspirations for the year ahead and beyond. Read on to discover some simple questions that may help you assess if your life goals have changed.

Last month, you read about 10 financial tasks to complete to get your finances on track for the new year. With the foundations set, you can start to think about what you want to achieve.

Setting goals is a crucial part of financial planning. After all, if you don’t have a direction, how do you know if you’re on track? Without a clearly defined goal, you could miss out on opportunities simply because you haven’t considered or prepared for them.

Even if you’ve already set goals, reviewing them can be a useful exercise.

Your goals can change during your lifetime. Perhaps you’d previously planned to retire at 65, but you’re enjoying your position less now. You might decide you want to move into a less demanding role, try something different, or transition into retirement sooner. Reflecting these wishes in your updated goals could help you adjust your financial plan to accommodate them.

So, here are three simple questions that could help you identify if your life goals should be updated in 2025.

1.  Are your existing goals still right for you?

A useful first step is to review the goals you’ve previously made – do they still reflect what you want to get out of life?

You might find that these goals still align with what you want to achieve, or only a small adjustment is needed to make them right for you.

Other times, you might find that your outlook has completely changed. Perhaps welcoming your first child has shifted your priorities, or an experience you enjoyed recently means you want to make a lifestyle change.

Negative events might affect your goals too, such as a relationship breaking down or work becoming more stressful.

2.  What makes you happy?

Spend some time pondering what makes you happy and helps you feel fulfilled in your life now.

You might say that spending time with your family or friends is what puts a smile on your face. Or volunteering in your local community gives you a sense of purpose and pride.

While financial planning considers the long-term, the present is just as important. Saving all your money for the future, but not enjoying life now could leave you feeling demotivated and missing out on experiences that are important to you.

Defining what makes you happy could help you create a financial plan that balances these experiences with long-term goals.

For example, if you want to spend more time with your children or grandchildren, could you reduce your working hours without compromising your retirement? A financial plan could help you assess if that’s possible.

3.  What are you looking forward to in the future?

Finally, it’s time to consider your long-term goals – when you think about the future, what gets you excited?

It’s never too soon to think about your long-term goals, even if they’re decades away. Some goals might require you to work towards them for years or are easier to manage if you start thinking about them sooner.

Your retirement is a good example of this. When you first start working, retirement might be 40 years or more away. Yet, if you want to enjoy a comfortable lifestyle once you step away from work, it could be beneficial to think about right away. Contributing to a pension at the start of your career could mean you need to add far less to reach your goals thanks to the power of compounding returns.

So, setting out long-term goals now could help your money go further and mean you’re far more likely to turn them into a reality.

Don’t forget to review your financial plan after setting goals

A financial review alongside updating your goals may be important, especially if you’ve updated them.

Carrying out a review could help you assess if your new goals are realistic with the steps you’re currently taking or if you need to make adjustments. For instance, you might plan to retire a few years earlier and visit exotic locations – do you need to increase your pension contributions to do this? Or could you use other assets to fund your trip of a lifetime?

Speak to us about your goals

As your financial planner, understanding your goals is important to us. Knowing what’s important to you means we’re in a better position to work with you to create a financial plan that will help you build the life you want. So, if your aspirations for 2025 or further ahead have changed, please get in touch 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.

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 voice cloning AI scam you need to be aware of

Artificial Intelligence (AI) is providing scammers with new ways to try and dupe you. One type of scam that’s on the rise that you should be aware of is “voice cloning”.

Voice cloning uses AI technology to replicate the voice of a friend or family member. Fraudsters then use this to contact you to ask you to transfer funds or share sensitive information. It can be incredibly difficult to spot a voice cloning scam, particularly if the so-called friend or family member appears to be in distress.

Worryingly, a person’s voice could be replicated from as little as three seconds of audio, which may be easily obtained if a loved one has uploaded a video to social media platforms. As well as providing fraudsters with a way to impersonate a person, social media could also help them identify who to target by seeing who interacts with their posts.

28% of UK adults say they have been targeted by an AI voice cloning scam

According to a survey from Starling Bank, 28% of UK adults say they’ve been targeted by an AI voice cloning scam at least once in the last year. Yet, almost half (46%) of UK adults have never heard of AI voice cloning scams, so the scale could be far larger.

The majority of people recognise how challenging it could be to detect a voice cloning scam. Indeed, just 30% say they would confidently know what to look for and 79% said they are concerned about being targeted.

One simple way to protect yourself is to have a safe phrase in place with trusted family and friends. This can provide you with a quick and easy way to verify who you’re speaking to if you’re ever in doubt and before you transfer any money. Be sure to never share your safe phrase online.

3 more AI scams that could affect you

Voice cloning isn’t the only way scammers are using AI.

In fact, according to Money Week, AI scams left Brits £1 billion out of pocket in the first three months of 2024 alone. The latest technology can make it more difficult than ever to spot the red flags, so, unsurprisingly, almost half of Brits said they feel “more at risk of scams”.

Being aware of common scams and the signs to watch out for could mean you’re able to avoid falling victim should you be targeted. Here are three other types of AI scams that are on the rise.

1. Deepfakes

A deepfake is a video, sound, or image that has been digitally manipulated using AI.

A study from Santander found that more than a third of Brits have knowingly watched a deepfake. Yet, more than half of people said they had not heard the term or misunderstood what it means, so many more could have watched a deepfake without realising.

Scammers can use deepfakes in a range of scams. For example, they might create a fake profile filled with realistic media to carry out a romance scam. Or they could use a deepfake to convince you you’re speaking to a genuine investment manager as part of an investment scam.

Deepfakes are often circulated on social media platforms, so it’s important to be vigilant and verify the information you receive, even when it looks convincing. Many deepfakes are imperfect, so taking a closer look at a video or image could highlight red flags, like blurring around the mouth, odd reflections, or abnormal movements, like blinking less than normal.

2. ChatGPT phishing

Phishing scams are nothing new, but AI means they could look far more trustworthy than previous attempts.

Phishing is when criminals use emails or texts that encourage you to visit a website, which may download a virus onto your computer, download attachments, or share personal details. Often, phishing scams will impersonate a genuine company or person to gain your trust.

In the past, you might have spotted a phishing email by noting spelling and grammar mistakes, an unusual sender, or the tone of voice changing from previous communications.

However, ChatGPT and other similar tools mean it’s simpler than ever for criminals to create text and designs that are similar to those they’re impersonating and remove tell-tale signs of a scam. So, it’s important to remain cautious when you’re responding to messages, especially if they’re out of the blue.

3. Verification fraud

It’s not just your loved ones that could be affected by voice cloning and deepfakes, you could be too. Many phone and banking apps allow you to verify who you are by sending a video of yourself or saying a password out loud on the phone.

AI could mean these types of security checks don’t provide the protection they once did. It could mean fraudsters can open accounts in your name, access your accounts, and more.

As a result, being careful about what you share online, including seemingly harmless photographs or videos, may help you avoid a scam.

We could help you spot a scam

If you’re contacted about a financial opportunity, whether through email, a phone call, on social media, or in another way, and you aren’t sure if it’s a scam, we could help. Sometimes another perspective could help you recognise the red flags you’ve overlooked or give you the confidence to ignore the message.

You can also use ActionFraud to report a scam or seek additional information.

Please note:

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

Investment market update: October 2024

While inflation is stabilising in many major economies, markets continue to experience some volatility, which may have affected your investment portfolio.

According to the latest International Monetary Fund’s Global Financial Stability Report, markets could be underestimating the risks of conflicts and upcoming elections.

Indeed, the rising price of gold suggests some investors are seeking a safe haven amid news of interest rate cuts, the upcoming US election, and escalating tensions in the Middle East. On 18 October, the price of gold hit $2,700 (£2,083) an ounce for the first time.

Read on to discover what else may have affected your investments in October 2024.

UK

The headline news in the UK in October 2024 was chancellor Rachel Reeves’ delivery of the Autumn Budget – the first from the Labour Party in 14 years.

She announced a raft of reforms, including £40 billion in tax rises to address the “black hole” in the public finances. Among the announcements were changes to Capital Gains Tax, Inheritance Tax, Stamp Duty, and employer National Insurance contributions.

Following the Budget on 31 October, the FTSE 100 – an index of the 100 largest companies on the London Stock Exchange – slumped to its lowest level in almost three months as investors reacted to the updates.

The latest GDP figures released by the Office for National Statistics (ONS) offered some welcome news. After the economy flatlined in June and July, it returned to growth in August and was up 0.2%.

Inflation figures were also positive. The ONS data shows that inflation was 1.7% in the 12 months to September 2024 – the first time it’s been below the Bank of England’s (BoE) 2% target in three and a half years.

The news led to the FTSE 100 rising by 0.65% on 16 October.

Inflation falling paves the way for the BoE to make further interest rate cuts, which would be welcomed by borrowers. Indeed, the BoE hinted that it could be more aggressive with rate cuts in the coming months.

Lower interest rates could boost the property market, and homebuilders benefited from the BoE’s outlook as a result. On 3 October, Persimmon was the top riser on the FTSE 100 after a 3.1% increase. Vistry and Barratt also gained.

Yet, it wasn’t all good news for the housebuilding sector. Just days later, Vistry issued a profit warning and said this year’s pre-tax profits would be around £80 million lower than expected. The announcement led to shares in the company plunging by almost a third.

Data suggests the manufacturing sector is struggling. According to S&P Global’s Purchasing Managers’ Index (PMI), confidence in the sector suffered its biggest drop since March 2020 in September. The fall was linked to the Autumn Budget with businesses reportedly taking a “wait and see” approach before making decisions.

Overall, business outlook could be gloomy. Trade credit insurance firm Allianz Trade predicts UK business insolvencies will rise by 5% this year when compared to 2023 to more than 29,000. That figure would be a 12-year high and around 30% above pre-pandemic levels.

However, some businesses are bucking the trend. At a time when many other retailers are struggling, fast-fashion giant Shein’s UK arm reported sales surpassed £1.5 billion for the first time in 2023, up from £1.12 billion in the previous year.

Europe

The eurozone’s key data is similar to the UK.

In the 12 months to September 2024, inflation in the eurozone fell below the 2% target to 1.7%. The news led to the European Central Bank (ECB) cutting interest rates for the third time this year – all key rates were trimmed by 25 basis points.

However, the ECB warned that inflation was expected to rise in the coming months.

PMI data indicates the eurozone economy is stuck in a rut. In October the PMI reading was 49.7 after a slight rise from 49.6 in September – only a figure above 50 indicates the economy is growing.

The manufacturing sector in particular is struggling, with a PMI reading of 45.0, indicating contraction. The bloc’s two largest members are dragging the figure down. Germany recorded its worst decline in factory conditions in 12 months, and France’s manufacturing sector is also contracting.

The UK wasn’t the only country to review taxation in October. According to Bloomberg, Italy’s finance minister said it plans to raise taxes on companies that have benefited the most from the economic turbulence of recent years to bring down the country’s deficit.

In response, Italy’s MIB share index, which tracks the 40 leading companies listed on the Borsa Italiana, fell 1.35% on 3 October.

US

Official figures show inflation in the US continues to near its 2% target when it fell to 2.4% in September 2024.

After recent concerns that the US economy could fall into a recession, job data indicates the economy isn’t weakening and businesses are feeling confident. According to the Bureau of Labor Statistics, the number of jobs increased by 254,000 in September.

The data led to the dollar rising and Wall Street rallying on 4 October. On the back of the news, the Dow Jones Industrial Average was up 0.55%, while the S&P 500 gained 0.75%, and the Nasdaq jumped 1.2%.

Asia

China and the EU continued their trade tit-for-tat, which had a knock-on effect on French spirit makers.

At the start of the month, the EU voted to increase tariffs on Chinese-made electric vehicles from 10% to up to 45% for the next five years. Beijing labelled the tariffs as “protectionist” and, just days later, announced temporary anti-dumping measures on imports of brandy from the EU. France’s trade ministry said the measures were “incomprehensible” and violated free trade.

Among the French companies affected were spirit makers Remy Cointreau and Pernod Ricard, which saw shares fall by 8% and 4% respectively on 8 October.

A Chinese press briefing also affected markets when investors were disappointed that officials didn’t announce any major stimulus measures. On 9 October, the Shenzhen Composite Index tumbled by 8.2% – its biggest fall since 1997 – while the Shanghai Stock Exchange lost 6.6% and the benchmark CSI 300 fell by 7.1%.

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.

4 valuable ways lifetime cashflow forecasting could give you financial confidence

Lifetime cashflow forecasting is a core part of financial planning that could help you understand how your future may look. It could provide essential information that means you’re able to feel confident about what’s to come and the decisions you make. Read on to find out how it works and why it might be valuable for you.

Lifetime cashflow forecasting uses your financial information and plans to make an informed guess about how your wealth will change over time. It can then use this information to create graphs and more so you’re able to visualise how the value of your estate and individual assets might change based on the decisions you make.

To start, you’ll need to input details about your financial circumstances, like how much you have in a savings account or the value of your pension. You can then add how the actions you take now will affect your wealth. For example, you might include adding £300 to your investments each month or contributing 8% of your income to your pension.

As other factors outside of your control will also affect your wealth during your lifetime, cashflow forecasting will make certain assumptions, such as:

·  The rate of inflation

· Growth of your investments

· Assets rising in value, like your property.

It’s important to ensure accurate information when using cashflow forecasting, and it’s often wise to err on the side of caution and be realistic when making assumptions – you might want to achieve annual investment returns of 8%, but is that likely when you consider your risk profile?

So, while the results of cashflow forecasting cannot be guaranteed, it could provide you with a valuable snapshot of how your wealth might change during your lifetime. But how does that help boost your confidence?

1. It could help you understand when you’ll be financially independent 

One of the challenges of managing your finances is that you often need to consider your lifestyle and needs for decades in the future, particularly when you’re thinking about retirement.

It can be difficult to know when you have “enough” saved in your pension to be financially independent. Lifetime cashflow forecasting could show you when you may be able to retire and take a sustainable income that suits your needs. As well as your pension it could incorporate other assets that might fund retirement too, such as savings or property.

If you find the date is further away than you’d like, cashflow forecasting could help you visualise how changing your finances now may allow you to retire sooner. For example, boosting pension contributions by 2% could bridge the gap so you’ll be financially independent earlier. 

2. It may give you the confidence to spend more

When you ask people about their long-term financial concerns, one of the biggest is that they’ll run out of money in retirement. Indeed, a survey published in IFA Magazine found that almost half of people are concerned about this.

Yet, the opposite can also happen – you have built up enough wealth to enjoy your later years, but due to worries about running out, you’re more frugal than you have to be. It could mean that you miss out on amazing experiences you’ve been looking forward to even though you have the means to pay for them.  

So, while it might seem illogical at first, cashflow forecasting could encourage you to spend more. Remember, financial planning isn’t about maximising your wealth, it’s about understanding how to use your assets to create the life you want, including spending more if you’re in a position to do so.

3. It might ease worries you have about unexpected events

Even the best-laid plans may be derailed by unexpected events that are outside of your control. Cashflow forecasting could let you model the shocks you’re worried about so you understand the effect they could have and what steps you might take to ensure your long-term security.

For instance, you may know you can afford to comfortably retire when you turn 65. But what if ill health means you need to retire five years earlier than expected? Cashflow forecasting could demonstrate how you might maintain your financial security by adjusting your income needs, adding more to your pension now, or using other assets.

If you have “what if?” questions that are preventing you from feeling confident about the future, cashflow forecasting could be a valuable tool that helps to put your mind at ease.

4. It could help you understand how you could support the next generation

For many people, providing support to loved ones and leaving a lasting legacy is important.

Lifetime cashflow forecasting could be useful if you want to pass on assets during your lifetime – it could help you understand the long-term implications and whether it might affect your financial security in the future.

You might also use it to calculate the expected value of your estate when you pass away, which could inform your decisions about how you’d like assets to be distributed or whether you need to consider Inheritance Tax.

Understanding what the value of your estate could be when you pass away might also help your beneficiaries plan more effectively. In some cases, you may want to involve your loved ones in your financial plan to discover how you may lend support.

Get in touch to talk about your goals and financial future

If you have questions about your financial future or would like to update your financial plan, please get in touch to arrange a meeting with our team.

Please note:

This blog 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 forecasting, tax planning, or estate planning.

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.

5 smart reasons why retirement planning should start in your 30s and 40s

If you’re working and contributing to your pension, you might think you don’t need to do any more retirement planning just yet. However, seeking retirement advice in your 30s and 40s could mean you’re in a better position when you’re ready to give up work.

According to a survey published in IFA Magazine, putting off retirement planning is something many workers are guilty of.

Indeed, it found that just 5% of Brits aged between 35 and 44 had taken financial advice to help them prepare for retirement. Even among older generations, many haven’t sought professional support – only 10% of 45- to 54-year-olds and 21% of those aged over 55 had sought retirement advice.

Here are five smart reasons why you shouldn’t put off planning for retirement, even if the milestone is decades away.

1. A goal could keep you on track

If you’re not sure how much you need to save for the retirement you want, it can be difficult to understand if you’re on track. Setting a goal could motivate you to contribute regularly or even increase how much you’re adding to your pension.

The final goal for your pension can seem like an impossible challenge. Remember, it’s not just your contributions that will support your long-term goals, but often employer contributions, tax relief, and investment growth too. So, understanding how your pension will grow could make your target seem more manageable.

2. Identifying a gap sooner could mean you have more options

When you review your pension alongside your retirement aspirations, you might find there’s a potential shortfall.

The good news is that by identifying the gap in your 30s or 40s, you could have more options. For example, you might adjust your retirement date or planned retirement lifestyle.

Alternatively, with decades until you’re ready to give up work, you could increase your pension contributions to bridge the gap. As your pension is usually invested, increasing contributions sooner could mean a relatively small increase to your regular contributions has a much larger effect on the value of your pension at retirement than you expect.

3. Discover if you’re making the most out of your pension savings

Reviewing your pension now could help you discover ways to get more out of your savings.

To encourage workers to save for the future, you often receive tax relief on your contributions – so, some of the money you’ve paid in Income Tax is added to your pension. In 2024/25, your total tax-relievable contributions, including those of your employer plus tax relief, can equal up to 100% of your annual earnings or a maximum of £60,000; this is known as the “Annual Allowance”.

Your pension provider will typically claim tax relief at the basic rate on your behalf. However, if you’re a higher- or additional-rate taxpayer, you’ll need to complete a self-assessment tax return to claim your full entitlement. You can only claim back tax relief from the last four tax years. As a result, putting off reviewing your pension until you retire could mean you miss out on tax relief.

You should note that if you’re a high earner or have already taken a flexible income from your pension, your Annual Allowance may be lower. Please contact us if you’d like to discuss how much you could add to your pension tax-efficiently.

There could be other ways to boost your pension that you may have overlooked too. For instance, your employer may increase their contributions in line with yours.

4. Review how you invest your pension

Normally, your pension will be invested. This provides your retirement savings with an opportunity to grow.

As you’ll often be investing for decades through a pension, the performance of your investments could have a huge effect on the income you can create later in life. Taking financial advice in your 30s and 40s could offer a valuable chance to check your pension is invested in a way that aligns with your risk profile and goals.

While investment returns cannot be guaranteed, we could also work with you to help you understand how investment returns might provide long-term financial security.

5. You could discover you’re able to retire sooner than expected

If you could retire five years sooner and still be financially secure, would you?

One of the challenges of retirement planning is calculating how much you need to save to be financially secure for the rest of your life. You might worry about running out of money in your later years or not having enough to cover unexpected costs.

An early pension review could highlight that you’re in a better financial position than you expect and give you the confidence to retire sooner.

Contact us if you’d like to talk about your retirement plans

Whether retirement is just around the corner or decades away, we could help you plan for retirement. With a tailored plan, you could find you’re in a better financial position and have more freedom when you’re ready to give up work. 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.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.