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  • Every year, around this time in my village of Kirkby in Furness, there is what has become a traditional fun event aimed at families, but much loved by all. This year it involves 96 households, placing an unusual article ‘on show’ in their garden, for the curious to wander around, peering into hedges and bushes to spot the object. The results are duly logged on a competition sheet that has been purchased for 50p each and the proceeds go towards the Gala, with the winner being announced on Gala Day.

    On Sunday, we visited friends for a bite to eat and as we entered their drive a Money Tree was in plain view, each branch sporting a splendid little bag containing some loose change. I enquired if they were growing it for the leader of a well-known political party!

    The idiom of a money tree is said to have its roots (sorry!) in Chinese culture and was something often quoted to me as a child.

    This led me to think of other sayings or superstitions linked to money. Here are just a few:

    • According to Palmistry and Hand Analysis, an itchy right palm is said to be a sign that you are about to receive money. It is also said that if you scratch it, it will stop the money from coming into your life. On the other hand, (sorry again!) an itchy left palm is said that you are about to lose money. If however, you rub your left palm with a piece of wood, this is said to protect your assets.
    • According to the Greeks, it is considered bad luck to completely empty your pockets, wallet or bank account, which could explain a lot, given what was said to be a reluctance of the Greeks to pay tax in the Global crisis!
    • A superstition thought to be bad Feng Shui advises that you should not place your purse or wallet on the floor, as this is said to be a disregard and disrespect of money. Practically, it also makes it easier for a sneak thief to steal a bag containing a purse or wallet from the floor.
    • Finally, and one that causes the most humour, is the superstition that says money will come your way if a bird poops on your head! This has happened to me on more than one occasion, leaving me to be very grateful that cows don’t fly!
  • Brian Tandy with Directors Ruth Power (L) and Liz Beavis (R)
    Caption: Brian Tandy with Directors Ruth Power (L) and Liz Beavis (R)

    When we are creating a financial plan for our clients, we take into account the current state benefits they might receive. When we project into the future there is no guarantee they will still apply, as women born in the 1950’s are unfortunately finding out. However, at the moment there is no reason to think for example anyone retiring in the next 20 years won’t receive some kind of state pension.

    As Financial Planners it is our job to be aware of the state benefits that our clients may be eligible for. We recently had training from an expert in this field, Brian Tandy.

    This is a very complex area, unfortunately not many people are well informed, including the people manning the helplines! Did you know there are over 50 different state benefits at the moment?

    Here is what I learned!

    There are three types of benefit

    1. Dependent on National Insurance Contributions
    2. Means tested
    3. Non means tested

    Contributory benefits include state pension, job seekers allowance and maternity benefit amongst others.

    Means tested benefits are dependent on level of income and savings on a sliding scale from £6,000 to £16,000 after which you are not eligible. This includes benefits such as universal credit and housing benefit

    Non means tested benefits are not dependent on NI contributions or financial criteria, they are decided upon very specific criteria including age or disability. Such benefits include the winter fuel payment (for now!) and attendance allowance.

    So where do people come unstuck?

    Firstly paying NI is not straightforward. If you have ever been a student, unemployed, had an earning break to bring up children or worked part time you may have not paid the correct amount of NI for the right number of weeks and years.

    It is imperative you ask for a pension forecast every five years or so no matter how young you are. Why? Because you can go back 6 years and make changes or pay additional contributions which can be difficult to do later on. You may not know that you can claim credits for years whilst in education- worth pointing out to your children!

    A little known handy tip for Baby Boomers, if you are looking after grandchildren for 20 hours a week or more you can claim NI credits

    Form filling is another major hurdle. For example when applying for attendance allowance, which we recommend many clients do for their spouses and family members, most people underplay their needs. The questions ask about the personal abilities and many people over estimate the amount of support being provided by loved ones. Just because you are not paying for care, it does not mean someone is not caring for you! The forms are onerous and don’t assume the questions are evenly weighted – they are not.

    Another pitfall is confusion with the pension system which has changed many times, so depending on when you have been paying NI different rules apply. It’s almost impossible to work this out for yourself- another reason to get that forecast!

    If you do one thing today, call the Government pension forecast department today. You can get a forecast online but it might not be as detailed. All the phone numbers you need are in this link

    https://www.gov.uk/future-pension-centre

    This is a very quick overview, we've got years of experience here especially when it comes to pensions so if you have any questions give us a call at FMB.

     

    Any figures stated are correct at June 2017

  • I recently read with interest in the news that a leaked draft of Labour's election manifesto had rejected increases in the state pension age above the age of 66.

    That would rule out a rise to 67, to be implemented by 2028, as well as further rises to 68 and possibly 69 or 70. However, the cost of scrapping these changes could cost £30bn by 2050. Is this realistic for a government already struggling to fund the State pension and other costs as it is?

    Whatever happens, it is becoming clearer and clearer that if you want to retire at an age young enough to enjoy your retirement and do all the things you plan to do, you will have to rely on more than the State Pension, and private provision will become more important than ever before.

    When I undertake retirement planning for my clients, I start by trying to get an idea of the lifestyle they want to have during their retirement and what the likely cost of this will be. Many people are resigned to the fact that they will have to reduce spending, or downsize their homes, but if they start to plan and save for their retirement early enough, this may not be the case.

    Once we have a target income in mind, I can look at the existing provision they have towards this. This may be a collection of various personal pensions they have set up over the years, or non-traditional pension savings such as ISAs – it can all be included towards retirement planning. I will also order a State Pension forecast for them so we can check they will be entitled to the full State Pension, or whether they will receive a reduced amount due to gaps in their National Insurance record. This will also confirm the age they can claim their State Pension. I then use cash flow modelling software to calculate the likely shortfall, or surplus, they will have in retirement.

    If it turns out there is a shortfall, we can then look at ways to reduce this, perhaps by increasing monthly savings if there is room for this in their budget, or by working a few years longer perhaps.

    There are also other considerations – if a plan is based heavily around saving towards retirement but then the client is unable to work due to illness for example, this could impact on their retirement as well as their current standard of living. To solve this issue, income protection policies could be considered.

    In general, having a robust financial plan which takes into account all necessary factors and is reviewed at least annually is key when starting to plan your retirement, and this is where we can help.

  • Owing to our location in the beautiful Lake District, it isn't surprising that many of our corporate clients are in the hospitality/tourism industry. When I visit businesses in this sector for appointments with their staff members, more often than not, they are dressed in uniform or clothing bearing their employer’s logo. In these meetings, we discuss the benefits package that their Employer provides for them which, owing to auto-enrolment, consists of a pension scheme as a minimum. However, many employers see the benefits of offering more than just a pension and also provide Death in Service (life assurance), Private Medical Insurance or Private Dental Insurance to their staff. Offering an attractive staff benefits package can not only help attract quality staff but can also help retain them too.

    Back to the clothing... did you know that if you wear a uniform at work, and have to wash, repair or replace it yourself, you may be able to reclaim £100s of tax for up to five years of expenses? This applies whether you only wear a branded t-shirt, or you're a fully-uniformed pilot, police officer or nurse. Don't pay a claims firm; you can do it simply yourself for FREE...

    Money Saving Expert - Uniform Tax Rebate

    Gov.uk - Income Tax Relief for Expenses of Employment

    We liaise with our clients on all options available to them for rewarding and retaining good, quality staff and would welcome the opportunity to review your staff benefits package.

  • One of the first steps in the financial planning journey is the ‘discovery’ meeting; where you meet with a financial planner and they get to find out about you; your worries, concerns, needs and aspirations for the future. It is at this initial meeting, when discussing goals, our planners often hear those dreaded words, “we just want to get better returns than we would in the bank.” Really? Surely that’s not a life goal!?

    So What is a Goal?

    A goal can be classed as something you hope to achieve by a certain time in your life; for example before you turn a certain age, before you retire or before you die. You will likely have both shorter-term and longer-term goals. It might be that you want to be able to afford to retire early, take a trip of a lifetime or to help your child or grandchild with their wedding or house purchase. Other goals might be a little less conventional such as buying your dream car or wanting to give up work to start your own business. Everyone is different and everyone will have their own plans for the future.

    What Happens Next?

    Once your needs and goals have been established, the planner gets to work on creating a personalised financial plan for you. Your plan includes objectives and actions on how we can help you achieve them. We can also ‘stress-test’ your finances by changing some of the inputs to help answer questions such as, ‘If I was unable to work, could we still afford to pay the mortgage?’, ‘If I retired earlier, would we still have enough money in retirement?’, ‘Can we afford to gift some money to the children and still be able to achieve our goals?” This can be really beneficial as it can provide you with peace of mind knowing how well your finances can cope with significant and challenging life events. This will also highlight if there is a shortfall in savings or protection and what we need to do to turn this around.

    My Life Road Map…

    My fiancé and I have had the odd conversation here and there about what we want out of our future but we’ve never really discussed it in detail – especially not with timeframes. Writing this blog prompted me to initiate a few conversations over dinner…

    We are expecting our first child in August; so a short-term goal for us is to continue building up our savings should we need some additional money while I am on maternity leave. Although we hope not to use it, with my partner being self-employed, having some additional savings would put a lot less pressure on him in quieter work periods and would also allow him to take some guilt-free time off to spend some quality time with me and the baby once he/she is born.

    Within the next three years, we hope to be married. Although we’ve started giving it some thought already, the wedding planning will properly commence when I return to work after my maternity leave, when we can concentrate on saving. Any surplus money from the baby fund can give us a head start with this. Within the next nine years, we hope to have moved into our ‘forever home’ although we’ll definitely need a house move in-between to accommodate the mass of ‘stuff’ accumulated from our growing family.

    It seems like such a long time off for both of us but we both agree that we need to give some proper thought to our retirement and start making personal contributions into a pension – sooner rather than later!

    Longer-term, we would like to think about saving some money so we can financially assist our child(ren) with their house deposit/wedding when the time comes. Also, looking into the far future, we hope that we will be able to spend a considerable amount of our retirement abroad; ideally by downsizing our property here and purchasing a holiday home. We haven’t put a timeframe on when this will be (yet!) as it all depends on how our retirement saving goes and what our State Pension age is – it currently stands at 68 for both of us but it will no doubt increase!

    What Are Your Goals?

    If you haven’t already given it some proper thought, start to think about your goals and when you hope to achieve them by. If you would like some help getting you on the right path to achieving them or need help getting your finances in order, give one of our friendly planners a call.

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