Your four-point checklist for investing for retirement!

I’m sure you are aware pensions changed in April this year. As result of these changes people now have more choices about how & when they can access their pension pot from the age of 55.

People can take cash, a flexible income (drawdown), or a fixed income (annuity), or indeed a mix of these. Drawing from our experiences since April we can say that drawdown has become a lot more popular as a choice due to the flexibility of accessing funds for the plan holder & their family after the plan holder’s death.

So what should you be thinking about when it comes to the money in your pension?

1. Think about your pension early - this allows you choose the investments that suit what you’re planning, whether that’s buying an annuity, taking a flexible income, taking your cash as a lump sum or a mix of all three. You can find more about this in our Are you ready for the pension freedom changes? blog.

2. Once you’re retired – stay invested – for example if you’re taking a flexible income from your pension it can be tempting to leave all your money as cash – but this may not give you the best results. Obviously cash is less likely than other investments to fall in value, however on the other hand it’s growth potential is also less. Therefore careful planning is required with respect to your investments during your retirement.

3. Balance your income goals – life expectancy is rising & therefore this means you will have to fund your retirement for much longer. One of the biggest challenges is making your money last over time; taking the income you need to today as well as making your money last through your retirement. In addition the new rules that reduce tax when inheriting pensions, reducing it to zero in some cases means you may want to make sure you have enough left to pass onto your loved ones. All these different goals need to be looked at & taken into account.

4. Take care of the early retirement years – If you’re taking an income, you need to ensure you manage & analyse how much your investments move up & down in value. A pro-active management of these funds is vital as it becomes much harder for your pension to recover its value after any early falls in the stock market.

Here at Reeves Independent our service is designed to help you make the right decisions at & during retirement. Please take a look at our Retirement Options Service Proposition

Speaking to someone about your pension options in retirement is easy with Reeves Independent, just use our contact form or call us on 0191 281 9862 for a FREE initial conversation!

Can you afford NOT to work you investments?

Another old Blog from 2012 but all the points are relevant!

A recent meeting with a prospective client has added further weight to the argument that if you want more money when you retire you have to really make your investments work.

Mr X was 50 years of age and had accumulated a value of 120k in his pension pot. He was planning to retire at 65 years of age.

What were Mr X’s options?
  • Pay more money into his pension – which was ruled out as this was not affordable
  • Make his investments work by being proactive – as this could really change the quality of his retirement
What could be achieved?
The table below shows what Mr X’s investments could return in 15 years time at varying interest rates
*Projection source from Aegon Scottish Equitable for a Flexible Personal Pension

As you can see even 2% interest rate intervals can have a MASSIVE impact on your pension fund & your income after you retire. Which result would you prefer? The left hand column or the right hand column? If it the right then you need to take action NOW!

How can you achieve this?

  • You need to sit down a devise a strategy & a plan of how you are going to manage your investments
  • Regularly review your investments to ensure the above mentioned strategy & plan are working
  • Have a tool in place that gives you the following;
        • Unlimited fund choice – to give you exposure to specialist sectors & investments
        • Opportunity to move into & out of investments at the right time
        • Control of what you have got 24/7 at the touch of a button
  • Receive support from an expert, experienced & personable advisor

Here at Reeves Independent we would work closely with you to give you the best opportunity of maximising your investment returns. We would give you the strategies, help you make the right decisions & give you the tools to allow you reach your investment goals.

Increase your chances of having more income when you retire by working your investments! 
Contact us on 0191 281 9862 info@reevesifa.com for a FREE no obligation appointment!

Please seek advice! Pensioners’ tax hell.

As we await George Osborne’s Summer Budget today I thought I would share this  article I read this morning from the Express website that highlights the importance of planning your pension income in retirement!

It is vital you speak to an expert to ensure you make the most of the pension you have worked so hard to save for throughout your life!

“Chancellor George Osborne’s reforms, introduced on April 6, allow the over-55s to take their pension pot as cash if they wish. The move was hugely popular but many people failed to realise that there was a big tax sting in the tail.

Many now face unexpected tax bills running into thousands of pounds.

More than 60,000 savers withdrew around £1billion in the first two months after being granted flexible access to their money in April, according to official figures”

Please do read the rest of the article – Pensioners’ tax hell. SAVERS taking advantage of their newfound pension freedoms have unwittingly handed the taxman a massive £700million windfall!

It is vital you understand all the tax implications of taking your pension in retirement!

Speaking to someone about these implications is easy with Reeves Independent, just email info@reevesifa.com or call us on 0191 281 9862 for a FREE initial conversation!

Other similar articles

Are you ready for the pension freedom changes?

Speak to an advisor NOW! Pension tax breaks: this is why they’re about to be cut

Five pension avoidance scam tips!

 

Case Study 2 – Pension Planning – Bruce (49 years old)

Bruce (49) came to us because he didn’t know where his pensions were or even how many he had! He was confused because he had received letters from some companies that he didn’t recognise. Furthermore he had received lots of different valuations & he didn’t know which ones were correct.

Bruce gave us his authority to look into his different pension plans. We then wrote to the various companies & asked them to provide us with information about his pensions, & an up-to-date value of his plans.

Once we had all the information from the providers we analysed them & prepared a straightforward report which showed all of his pensions together and what they were worth in total. Furthermore we provided Bruce with a number of recommendations, which we discussed with him on a face-to-face basis. He was then able to make the best decision for him that that suited his current & future needs.

Bruce ended up moving 5 of 7 pensions into a SIPP (Self-Invested Personal Pension) on a platform. Moreover he was able to put his other investment vehicles, including ISA’s & unit trusts onto this platform. This arrangement means it’s much easier for Bruce to understand his current position as well as giving him the control he desired.

Finally Bruce has become a Portfolio Management Client & therefore receives regular reviews to ensure his pension is working as hard as possible for him. This will hopefully then give him the retirement he desires!

Does this case study sound like you?

Speaking to someone about your pension arrangement is vital to ensure you get the retirement you desire! Why not do that with Reeves Independent, just email info@reevesifa.com or call us on 0191 281 9862.

Case Study – Pension Planning – Mr D (56 years old)

Recently Mr D (56) came to us via the medium of Linked In for help with his pension planning.

He had a few plans (5 in total) with different companies and he didn’t understand what he had. On top of this he had no idea what they were worth, how to find answers, and most importantly – when he could retire!

Mr D wanted us to explain his information to him in a way that he could easily understand.

After an initial dialogue where we gathered some base facts & established his needs we sent off to the relevant pension providers to gather the information on his plans. Some of his plans had started many years ago, so the information was quite complicated.

Once we had all the information from the providers we analysed them & prepared a straightforward report which showed all of his pensions together and what they were worth in total. Furthermore we provided Mr D with a number of recommendations, which we discussed with him on a face-to-face basis.

Mr D ended up moving his 4 of his old, poorly performing pensions to one new plan, which he finds much easier to understand and which has the chance of giving him a bigger pension when he retires.

Furthermore Mr D has become a Portfolio Management Client & therefore receives regular reviews to ensure his pension is working as hard as possible for him. This will hopefully then give him the retirement he desires!

Does this case study sound like you?

Speaking to someone about your options is imperative! Why not do that with Reeves Independent, just email info@reevesifa.com or call us on 0191 281 9862.

Is it time to consider your tax saving options? What is your ISA allowance for 2014/2015?

Each tax year, you get an ISA allowance which sets the maximum that can be saved within the tax-free wrapper from April to April.

The old ISA system used to limit how much you could put into each pot – you’d either get half your allowance in cash and half in shares, or you could choose to put it all in shares.

But from 1 July 2014, the rules were almost completely relaxed. Although you still have a limit to the amount you can save £15,000 in 2014/15 (£15,240 from April 2015), you now get to choose how you split this between stocks & shares and cash ISAs. You even get to choose whether you want to split it – if not, you can use the whole amount for stocks & shares or the whole amount for cash.

You must save or invest by 5 April, the end of the tax year, for it to count for that year. Crucially, any unused allowance doesn’t roll over – so if you don’t use it, you lose it forever. You’ll get a new allowance the next tax year, but won’t be able to contribute anything to the old ISA.

Any savings or investments which stay within the tax-free ISA wrapper will continue to earn interest and reap the tax benefits until you withdraw the money.

If you would like any advice on your ISA pension contributions or any other investments, please contact us for a free initial consultation on 0191 281 9862 or email info@reeves.com and we promise to respond to your enquiry.

The importance of Mortgage Protection! Do you have cover in place?

Yesterday I received a marketing e-mail from Zurich promoting mortgage protection, which had a number of facts within it that I found quite eye-opening. Therefore I thought I would share them with you to get thinking about your own personal cover provisions!

  • You are 4.6 million times more likely to get cancer than win a jackpot lottery payout.
  • 4 in 5 people with cancer are affected financially.
  • On average, over 1,558 people die each day in the UK.

As I’m sure you agree these are quite hard hitting facts, which in my opinion really highlight the importance of making sure you have cover in place. Furthermore Zurich’s e-mail went on to say/ask the following;

“Buying a new home is one of life’s biggest and most exciting events. It’s also a big financial commitment – one that could be with you for 25 years or even more.

One of the things you’ll discuss with your adviser is how much you can afford to pay now. But equally important is making sure you can continue to make your mortgage payments in the future, whatever happens.

Your ability to pay your mortgage is based on your income. So stop and think for a moment – what would happen if your income were reduced in the future? Could you continue to make your mortgage payments?”

There are a number of questions above for you to consider if you don’t have cover in place!

Additionally I must stress it is also important to review your protection (if you have it) on a regular basis as circumstances can change – therefore meaning cover needs to be increased or in cases decreased

If you want to review your protection needs please contact Reeves Independent on 0191 281 9862 or email liam@reevesifa.com for a FREE initial discussion!

Writing your will and planning your estate

Making a last will and testament is something that most people choose to put off for a variety of reasons (some two thirds of UK adults it is estimated). Often it’s a subject we’d prefer not to think about or we’re not entirely sure what is involved.

However, writing a will shouldn’t be difficult. It can be done quickly, often very cost effectively and offers significant benefits. At Reeves Independent, our new wills service will we take the hassle out of estate planning to make it easy for you to plan ahead.

What we do

We will guide you through the process to ensure that your wishes are carried out, your assets are distributed correctly and that the interests of your loved ones are protected.

We take the time to understand you, your situation and circumstances to provide the best possible advice on:

Our fees start from £100 for a will with other services priced accordingly.

  • Wills £100
  • Family Trust £200
  • Interest in Possession Trust (IIP) £200
  • Deed of Severance £100 per person per property
  • Lasting Powers of Attorney – Finance £400
  • Lasting Powers of Attorney – Welfare £400
  • Lasting Powers of Attorney – Registration £50
  • General Powers of Attorney £50
  • Office of Public Guardians LPG £130*
  • Storage – Reeves £30*

(All costs exclude VAT apart from * where not applicable)

To arrange an appointment with one of our team, please give us a call on: 0871 271 1280 or visit www.reevesifa.com.

 

 

Using Lasting Powers of Attorney

You can take care to ensure that your assets go to the right people after your death by making a will. However, if you care enough about what happens to your assets after you die, then you should care even more about keeping them and yourself safe whilst you are alive. To do this, you can set up Lasting Powers of Attorney.

What is a Power of Attorney?

It’s a legal document that allows an individual (donor) to appoint a person(s) (attorney(s)) of their choice to look after their affairs should they, at a later stage, no longer wish to make these decisions or lack the capacity to do it.

Powers of Attorney

There are three different types of document:

• Lasting Power of Attorney (LPA) for property and financial affairs

• Lasting Power of Attorney for health and welfare

• General Power of Attorney (GPA)

These replaced Enduring Powers of Attorney in 2007.

Lasting Powers of Attorney

The LPA for property and financial affairs allows your attorneys to make decisions about paying your bills, dealing with banks and investments and even collecting benefits and selling property. The LPA for health and welfare allows the attorneys to make decisions around care issues, where the donor lives and even life saving treatment.

As the name suggests, both of these powers continue to be valid even after the donor loses capacity. When the LPA is registered, it can only be used if the donor has lost mental capacity.

The LPA must be signed by an independent person confirming that the donor understands what the LPA is. It must also be registered with the Public Guardian’s Office before it’s legal.

General Powers of Attorney

A GPA allows attorneys to make decisions and act in any matters relating to the donor’s property and affairs with the exception of their will or any gifts. It is effective immediately and remains in force until it is either revoked or the donor becomes mentally incapable and it’s automatically revoked.

Who can make an LPA?

Anyone over the age of 18 can make an LPA as long as they have mental capacity at the time.

Why do I need an LPA?

The main reason is in case you suffer an accident that incapacitates you or you become mentally incapacitated through old age or some other reason. The benefits of this are:

• You can plan in advance who you want to make key decisions for you

• The decisions you want them to make

• How you want your attorney(s) to make those decisions

What happens if I don’t have an LPA?

With an LPA in place, your attorneys will be able to look after your affairs. However, without one, the only way your financial affairs can be managed is by an application (by a relative or someone close to you) to the Court of Protection for Deputyship. This can be time consuming and costly and a judge will make the final decision so may not even appoint the person who you would want.

Around 55,000 people are registered with the Court of Protection as being mentally incapable to act on their own. Their affairs are under the jurisdiction of the court. This means that without an LPA, those seeking to care for you, have the added stress of having to deal with officials every time a decision needs to be made.

Who can act as an attorney?

You should appoint someone you trust – such as a relative or a professional. Anyone who is over the age of 18 and has mental capacity can sign.

How would you like your attorneys to act?

You will also need to consider how you would like your attorneys to act and you have three options:

Together: this means that attorneys make all decisions together. If one attorney disagrees, that decision can’t be made on your behalf. You might choose this option if you want to ensure all your attorneys are in agreement about every decision.

Together and independently: means your attorneys can make all decisions together or independently. You might choose this option if one of your attorneys is closely involved in your financial affairs and you trust them to make decisions on their own.

Together for some decisions and independently for others: this means they can make some decisions independently but must be in agreement for others. This might be an option if you want attorneys to make day-to-day decisions such as paying nursing home fees but be in agreement about significant decisions, like selling your home.

Registering your LPAs

Once you have made the decision to make an LPA, you must register it with the Office of Public Guardian (OPG) to make it valid. It costs £130* to register an LPA with the OPG.
*It’s possible for some people to qualify for an exemption or remission from these registration fees. You can qualify for a 50% reduction if you earn less than £12,000 per year. You may qualify for an exemption if you are in receipt of a range of means tested benefits such as income support; employment and support allowance; job seeker’s allowance; pension guarantee credit or element of state pension credit; housing benefit; council tax benefit

Avoid problems by writing a will

Have you written a will? It’s estimated over 60% of people haven’t, preferring to put it off. It’s a natural thing to do as talking about the subject can be difficult, but planning ahead could save a lot of money and difficulty in the long run. As part of our new wills and estate planning service, we look at the benefits of forward planning.

The major benefit of effective estate planning is that you get control of where your assets go and who gets what – ensuring your wishes are carried out, potential problems are avoided and your assets are protected from extra inheritance tax and other costs (for example care home fees, bankruptcy and generational IHT).

If you die without a valid will this is known as ‘intestacy’. Without a valid will, your assets are divided to a set a predetermined rules – irrespective of any intentions you may have. This is something that happens frequently and in complicated cases (numerous high profile cases hit the news) disputes can still be going on decades later.

Writing a will gets more important as we get older – although worryingly recent statistics show that nearly half of people between the ages of 55 and 64 have never made a will.

However, while this is true, in reality anyone over the age of 18 should consider writing one – particularly if you have dependents such as children or other relatives to look after. Many people assume that wills don’t matter if you have children and plan to leave all your assets to your spouse. However, your husband or wife would only receive the first £250,000 of an estate, with the remainder divided based on current law.

When children are involved, it’s not just the assets that are a consideration, there is also the issue of appointing guardians. This should really encourage anyone with children to make a will because if you die before the age of 18, it may be up to the courts to decide who looks after them.

The overall message should therefore be to make a will and review it when your circumstances change. For example, you should look to update your will post any relationship break-up to prevent your estate going to the wrong person.

Planning your estate like this will give you control over your assets. It gives you time to think through whom you want your beneficiaries to be – individual or charity – and structure how you make the arrangements for them to benefit. You can also plan who you want to execute your will too.

To find out more about our wills and estate planning service, give us a call on 0871 271 1280 and arrange an appointment with one of our advisers.